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 instalments. Interest is charged at 12% p.a. What is the monthly instalment?
Q1. 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 instalments. Interest is charged at 12% p.a. What is the monthly instalment?
Answer: $504
Explanation: Balance = 0.9×21000 = $18900; interest over 5 years at 12% p.a. = $11340; total repayment = $30240 ÷ 60 = $504 per month.