Question

The cash price of a gas stove was X ringgit. Roy bought the stove by making a RM100 down payment and the balance was settled by making 24 monthly payments of RM55 each. If the interest rate charged was 10% on the original balance, find: a) The cash price of the stove. b) The original unpaid balance.

Answer 1

a) The cash price of the gas stove was 1300 ringgit

b) The original unpaid balance = 1200 ringgit

The original unpaid balance including interest = 1320 ringgit

Explanation:

Given:

Cash price of the gas stove = X ringgit

Down payment = RM100

Total monthly payments = 24

Each payment = RM55

Interest rate charged = 10%

now,

After down payment,

Remaining balance = RM(X - 100)

Balance after interest = RM(X - 100) × ( 1 + r)

= RM(X - 100) × ( 1 + 0.1)

= RM(1.1X - 110)

also,

amount paid in total installments

= 24 × RM55

= RM1,320

and,

RM1,320 = RM(1.1X - 110)

or

1.1X = 1,430

or

X = 1300

Hence,

a) The cash price of the gas stove was 1300 ringgit

b) The original unpaid balance = X - 100

= 1300 - 100

= 1200 ringgit

and,

after including interest

The original unpaid balance = 1.1(X - 100)

= 1.1 × (1300 - 100)

= 1320 ringgit