Answer to Question #170058 in Financial Math for Miyoung

Question

A student buys a TV set of R11000 on a hire purchase agreement. He agrees to pay a deposit of 20% and the balance over a period of two years in a monthly installment at 14% simple interest p. a. He also takes out and insurance premium of R18,50 per month. Determine the amount of each installment

Answer 1

Hire purchase =(deposit +Monthly installment)

Deposit =(20/100)*11000

=R2200

Remaining Amount = 11000-2200=8800

A=P(1+in)

Subitute the values

Amount=8800(1+(0.14*2))

 =R11264

Months =2*12

=24Months

Therefore =11264/24

=R469.33

Monthly insurance =1850

Total monthly insurance =1850+469

=R2319