Answer:
Michael will pay a total of R224 000 over 60 months for the tractor, including interest.
Explanation:
To calculate the total amount Michael will pay after 60 months of hire purchase with a simple interest rate of 10%, we need to follow these steps:
Calculate the total amount to be financed by subtracting the deposit from the tractor price:
Total amount to be financed = Tractor price - Deposit
Total amount to be financed = R160 000 - R20 000
Total amount to be financed = R140 000
Calculate the total interest payable over the 60-month period:
Total interest payable = Total amount to be financed x Interest rate x Loan period (in years)
Total interest payable = R140 000 x 0.10 x (60/12)
Total interest payable = R84 000
Add the total interest payable to the total amount to be financed to get the total amount payable over the 60-month period:
Total amount payable = Total amount to be financed + Total interest payable
Total amount payable = R140 000 + R84 000
Total amount payable = R224 000
Therefore, Michael will pay a total of R224 000 over 60 months for the tractor, including interest.