Answer to Question #173900 in Financial Math for Tiisetso

Question

The wedding dress that liels wanted to purchase,cost R15000.she purchase it using her credit card or she could pay it off over 3 uears if she made use of hire purchase agreement.

1.determine how much liels would eventually pay if she decieded to use her credit card where the rate was 18% compound interest per annum over 3 years.

2.determine how much liels would eventually pay if she decieded to the hire purchase agreement at a rate of 18% per annum simple interest over 3 years

3.The original cash price for the dress was R15000.in 3 uears time,due to inflaction,the cost of the same dress would be R18017.36

What would be the average inflation rate(as a percentage) for the period?

Answer 1

1.

$A=P(1+r/n)^nt$

$15000=P(1+0.18)^3$

$15000=1.643032P$

$P=9129.46309$

Liel would pay R9129.46309 if she paid using her credit card.

2.

$cash price = 9129.46309$

$SI= P*R*T$

$= 9129.46309*0.18*3$

$=4929.910069$

$total amoumt =9129.46309+4929.910069$

$=R14059.37316$

3.

$[(18017.36-15000)/15000]*100$

$=0.201157*100$

$=20.1157$ percent