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Explain hire-purchase. Calculate the discount, deposit, interest rate and financed amount for the Kenwood Titanium Chef.

Business/Management

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4 parts
5.2

R640.99\text{R640.99}

5.3

R974.85\text{R974.85}

5.4

18.5% annual simple interest\text{18.5\% annual simple interest}

5.5

R8 590.04\text{R8 590.04}

Step-by-step solution

8 steps

Here are the answers to the questions:

Part 5.1

Hire-purchase is a credit agreement where a buyer takes possession of goods immediately but pays for them in instalments over an agreed period. Ownership of the goods only transfers to the buyer once the final instalment has been paid.

Part 5.2

R640.99\text{R640.99}

  1. Identify the original price and the special price.

    Original Price = R7 139.99
    Special Price = R6 499.00

  2. Calculate the discount amount.

    Discount Amount=Original Price−Special Price\text{Discount Amount} = \text{Original Price} - \text{Special Price} Discount Amount=R7 139.99−R6 499.00\text{Discount Amount} = \text{R}7\,139.99 - \text{R}6\,499.00 Discount Amount=R640.99\text{Discount Amount} = \text{R}640.99

    The discount amount on the Kenwood Titanium Chef is R640.99\boxed{\text{R640.99}}.

Part 5.3

R974.85\text{R974.85}

  1. Identify the special price and the deposit percentage.

    Special Price = R6 499.00
    Deposit Percentage = 15%

  2. Calculate the deposit amount based on the special price.

    Deposit Amount=Special Price×Deposit Percentage\text{Deposit Amount} = \text{Special Price} \times \text{Deposit Percentage} Deposit Amount=R6 499.00×0.15\text{Deposit Amount} = \text{R}6\,499.00 \times 0.15 Deposit Amount=R974.85\text{Deposit Amount} = \text{R}974.85

    The deposit was calculated as 15%15\% of the special price of R6 499.00, which is R974.85\boxed{\text{R974.85}}.

Part 5.4

18.5% annual simple interest\text{18.5\% annual simple interest}

The interest rate charged on the financed amount is \boxed{\text{18.5% annual simple interest}}.

Part 5.5

R8 590.04\text{R8 590.04}

  1. Calculate the financed amount (the principal loan amount).

    Financed Amount=Special Price−Deposit Amount\text{Financed Amount} = \text{Special Price} - \text{Deposit Amount} Financed Amount=R6 499.00−R974.85\text{Financed Amount} = \text{R}6\,499.00 - \text{R}974.85 Financed Amount=R5 524.15\text{Financed Amount} = \text{R}5\,524.15

  2. Calculate the simple interest using the formula I=P×R×TI = P \times R \times T.

    Where:
    P=Financed Amount=R5 524.15P = \text{Financed Amount} = \text{R}5\,524.15
    R=Interest Rate=18.5%=0.185R = \text{Interest Rate} = 18.5\% = 0.185
    T=Time in years=3 yearsT = \text{Time in years} = 3 \text{ years}

    I=R5 524.15×0.185×3I = \text{R}5\,524.15 \times 0.185 \times 3 I=R3 065.89325I = \text{R}3\,065.89325

  3. Calculate the total amount payable after three years, excluding the deposit.

    This is the financed amount plus the interest.

    Total Payable=Financed Amount+Interest\text{Total Payable} = \text{Financed Amount} + \text{Interest} Total Payable=R5 524.15+R3 065.89325\text{Total Payable} = \text{R}5\,524.15 + \text{R}3\,065.89325 Total Payable=R8 590.04325\text{Total Payable} = \text{R}8\,590.04325

  4. Round the total payable amount to two decimal places.

    Total Payable≈R8 590.04\text{Total Payable} \approx \text{R}8\,590.04

    The amount payable after three years, excluding the deposit, is R8 590.04\boxed{\text{R8 590.04}}.

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