A car is purchased on hire-purchase. The cash price is $21 000 and the terms are

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Question

A car is purchased on hire-purchase. The cash price is $21 000 and the terms are a deposit of 10% of the price, then the balance to be paid off over 60 equal monthly installments. Interest is charged at 12% p.a. What is the monthly installment?

Options:

A . $503

B . $504

C . $505

D . $506

Answer: Option B
CASH PRICE = $21 000
DEPOSIT = 10% × $21 000
= $2100
LOAN AMOUNT = $21 000 − $2100
= $18 900
I=P*R*T/100
I=11340
TOTAL AMOUNT = 18 900 + 11 340
= $30 240
REGULAR PAYMENT = TOTAL AMOUNT /NUMBER OF PAYMENTS

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