Question 1068812: The hire purchase price of a refridgerator is R6500. the deposit of R500 is made and the remainder is paid in equal monthly payments of R250. what is the interest rate ( simple interest ) charged on this transaction?
Answer by KMST(5328)   (Show Source):
You can put this solution on YOUR website! It depends on how many payments of  are required.
The number of payments required should be stated as part of the question.
If you have to make only  such payments,
the amount paid in those such payments adds up to
 ,
and since that plus the  deposit equals the full price,
 ,
the interest rate would be  .
If you have to make  such payments,
the amount paid in those such payments adds up to
 .
After the deposit, there was a debt of
 .
If  .
That amounts to  of the amount financed.
With that paid over   ,
The simple interest would be  .
months
and since that plus the deposit equals the full price,
,
the interest rate would be .
If you want to write a formula, you could write
 , where
 = interest paid,
 = amount financed,
 = time in years, and
 = interest rate as a decimal, for example  for  .
Then, for  ,
with  for monthly payments,
you would write
 , and solve to get .
 (for  interest rate.
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