Question

Henry buys a designer furniture set at price of $1200. He pays 25% deposit and interest in 36 months plus outstanding balance. The interest charged on balance is 12%. The total hire purchase price is?

Answer 1

We are given the following information:

Henry buys a furniture for $1,200

He pays a deposit of 25%

Duration = 36 months = 3 years

Interest charged on balance = 12%

We will proceed to solve the total hire purchase price as shown below:

`\begin{gathered} Deposit=25\text{\%}*1,200 \\ Deposit=\text{ \$}300 \\ CashPrice(P)=(Price-Deposit)=(1,200-300)=900 \\ CashPrice(P)=\text{ \$}900 \\ \\ TotalInterest=(P* R* T)/(100) \\ TotalInterest=(900*12*3)/(100) \\ TotalInterest=900*0.12*3 \\ TotalInterest=\text{ \$}324 \\ \\ TotalHirePurchase=Deposit+CashPrice+TotalInterest \\ TotalHirePurchase=(300+900+324) \\ TotalHirePurchase=\text{ \$}1524 \\ \\ \therefore TotalHirePurchase=\text{ \$}1,524 \end{gathered}`

Therefore, the total hire purchase is $1,524