Cash Price is K 4200, initial deposit is K 700, interest is 10% in a hire purchase. Calculate the:
(a) balance outstanding = cash price - Initial price
= K 4200 - K 700
Balance = K 3500
Answer: K3500
(b) Interest
Answer: K 350
(c) total loan
Total Loan = Balance outstanding + Interest
Total Loan = K 3500 + K 350
Total Loan = K 3850
Answer: K3850
(d) Hire purchase price
Answer (2)
Calculate the balance outstanding by subtracting the initial deposit from the cash price: K 4200 − K 700 = K 3500 .
Determine the interest by calculating 10% of the balance outstanding: 0.10 × K 3500 = K 350 .
Compute the total loan by adding the balance outstanding and the interest: K 3500 + K 350 = K 3850 .
Find the hire purchase price by summing the initial deposit and the total loan: K 700 + K 3850 = K 4550 . The hire purchase price is $\boxed{K4550}.
Explanation
Understanding the Problem We are given the cash price of an item, the initial deposit, and the interest rate in a hire purchase agreement. We need to calculate the balance outstanding, the interest, the total loan, and the hire purchase price.
Calculating Balance Outstanding (a) To find the balance outstanding, we subtract the initial deposit from the cash price: B a l an ce O u t s t an d in g = C a s h P r i ce − I ni t ia l De p os i t B a l an ce O u t s t an d in g = K 4200 − K 700 B a l an ce O u t s t an d in g = K 3500
Calculating Interest (b) To find the interest, we calculate 10% of the balance outstanding: I n t eres t = 10% × B a l an ce O u t s t an d in g I n t eres t = 0.10 × K 3500 I n t eres t = K 350
Calculating Total Loan (c) To find the total loan, we add the balance outstanding and the interest: T o t a l L o an = B a l an ce O u t s t an d in g + I n t eres t T o t a l L o an = K 3500 + K 350 T o t a l L o an = K 3850
Calculating Hire Purchase Price (d) To find the hire purchase price, we add the initial deposit and the total loan: H i re P u rc ha se P r i ce = I ni t ia l De p os i t + T o t a l L o an H i re P u rc ha se P r i ce = K 700 + K 3850 H i re P u rc ha se P r i ce = K 4550
Final Answer Therefore, the balance outstanding is K3500, the interest is K350, the total loan is K3850, and the hire purchase price is K4550.
Examples
Hire purchase agreements are commonly used when purchasing expensive items like cars or furniture. Understanding how to calculate the different components, such as the balance outstanding, interest, total loan, and hire purchase price, helps consumers make informed decisions about their purchases. For example, if you want to buy a car with a cash price of K 4200 and can only afford an initial deposit of K 700, knowing how the interest affects the total cost allows you to budget effectively and compare different financing options. By understanding these calculations, you can determine the true cost of the item and plan your finances accordingly.
The hire purchase price is calculated by adding the initial deposit of K700 to the total loan amount of K3850, resulting in a final cost of K4550. This includes the balance outstanding of K3500 and interest of K350. Understanding these calculations is essential for making informed financial decisions.
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