Question

Robert buys a fridge that cost R8 500 on hire purchase and he pays a deposit of R1 500. The simple interest rate is 8% p.a. Calculate his monthly instalment if the hire purchase agreement says that he must pay back the money in 3 years.​

Answer 1

Explanation:

Instalment = (Total Amount ÷ Number of Months) + Monthly Interest

Simple interest = Principal x Rate x Time

= R7,000 x 8% x 3

= R1,680

Total amount = Principal + Simple interest

= R7,000 + R1,680

= R8,680

Monthly interest = Simple interest ÷ Number of months

= R1,680 ÷ 36

= R46.67

Therefore, Robert's monthly instalment will be:

Instalment = (Total Amount ÷ Number of Months) + Monthly Interest

= (R8,680 ÷ 36) + R46.67

= R323.33

Robert's monthly instalment will be R323.33 for the next 36 months to pay off his fridge.