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The retail price of a television set is $4,500. If the buyer pays by cash, the price is 10% below the retail price. If the set is bought on higher purchase, the buyer pays a down payment of $675 and 24 monthly installments of $212.50. Calculate for the television the:

cash price to the buyer, if he pays by cash.
amount payable.
outstanding balance.
hire purchase price.
interest.
difference between the hire purchase and the cash price.
percentage interest charged.

User Ian Bishop
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1 Answer

5 votes

Cash price to the buyer, if he pays by cash:

The cash price would be 10% less than the retail price of $4,500:

Cash price = $4,500 - (10% * $4,500)

Cash price = $4,500 - $450

Cash price = $4,050

Amount payable:

If the buyer chooses to purchase the TV on higher purchase, the amount payable would be the sum of the down payment and the total amount of monthly installments:

Amount payable = Down payment + (24 * Monthly installment)

Amount payable = $675 + (24 * $212.50)

Amount payable = $5,175

Outstanding balance:

The outstanding balance would be the difference between the amount payable and the down payment:

Outstanding balance = Amount payable - Down payment

Outstanding balance = $5,175 - $675

Outstanding balance = $4,500

Hire purchase price:

The hire purchase price would be the sum of the down payment and the outstanding balance:

Hire purchase price = Down payment + Outstanding balance

Hire purchase price = $675 + $4,500

Hire purchase price = $5,175

Interest:

The interest charged on the hire purchase would be the difference between the hire purchase price and the cash price:

Interest = Hire purchase price - Cash price

Interest = $5,175 - $4,050

Interest = $1,125

Difference between the hire purchase and the cash price:

The difference between the hire purchase price and the cash price would be the interest charged:

Difference = Interest

Difference = $1,125

Percentage interest charged:

To calculate the percentage interest charged, we can divide the interest by the hire purchase price and multiply by 100:

Percentage interest charged = (Interest / Hire purchase price) * 100

Percentage interest charged = ($1,125 / $5,175) * 100

Percentage interest charged = 21.74%

Therefore, the cash price to the buyer is $4,050, the amount payable is $5,175, the outstanding balance is $4,500, the hire purchase price is $5,175, the interest charged is $1,125, the difference between the hire purchase and the cash price is $1,125, and the percentage interest charged is 21.74%.

User Shazinltc
by
9.0k points