The monthly instalment is $26.40
The total cost of the bicycle using purchase is $324.00
What kind of interest rate applies to hire purchase?
The form of interest computation for hire purchase is simple interest, in other words, the interest payable on the hire purchase over the period of 10 months can be determined
I=PRT
P=Purchase price-deposit=$300-$60
P=purchase price=$240
R=annual interest rate=10%
T=time taken to finish paying up=10/12(10 months divided by 12 months that make year)
I=$240*10%*1
I=$24
The total amount to be repaid is the principal plus the interest of $20
total repayment=$240+$24
total repayment=$264
monthly instalment=$264/10
monthly instalment=$26.40
Total payment under hire purchase=total repayment+ interest
Total repayment under hire purchase=$264+$60
Total repayment under hire purchase=$324.00
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