SOLUTION: Rose wants to buy a car on hire purchase for N$75,000.00 at the rate of 11% p.a. repayable using monthly installments for a period of 3 years and 10 months. (No de posit was requir

Question 1194020: Rose wants to buy a car on hire purchase for N$75,000.00 at the rate of 11% p.a. repayable using monthly installments for a period of 3 years and 10 months. (No de posit was required). Use the given information to calculate the:
(a) Total amount of money expected to be paid to the Hire Purchase Company over the years.
(b) Monthly installment to be paid by Rose.
c) Bank 1 offered her a loan repayable at a certain monthly installment for the same period of time
as the car hire company at the rate same rate of 11% p.a. whereas Bank 2 offered to reduce the rate
of by 1.5% p.a. What is the:
(i) Total amount of money expected to be received by Bank 1.
(ii) Monthly instalment to be paid by Rose to Bank 1.
(iii) Total amount of money expected to be received by Bank 2 using the reduced interest rate.
(iv) Monthly installment to be paid by Rose to Bank 2.
(v) How much money will Rose save per month using the cheapest option?

Answer by Theo(13342) (Show Source): You can put this solution on YOUR website!
see my excel worksheet below:

answers to your questions are below:

Rose wants to buy a car on hire purchase for N$75,000.00 at the rate of 11% p.a. repayable using monthly installments for a period of 3 years and 10 months. (No de posit was required). Use the given information to calculate the:

(a) Total amount of money expected to be paid to the Hire Purchase Company over the years.
total amount of money to be paid to the hire purchase company is 92,258.70.
this is the price of the car plus total interest on the loan.

(b) Monthly installment to be paid by Rose.
monthly instalment to be paid to the hire purchase company is 2005.62.

c) Bank 1 offered her a loan repayable at a certain monthly installment for the same period of time as the car hire company at the same rate of 11% p.a. whereas Bank 2 offered to reduce the rate of by 1.5% p.a. What is the:

(i) Total amount of money expected to be received by Bank 1.
bank 1 would expect to receive total payments of 92,258.70.
this is the same amount that she would be paying to the hire purchase company.

(ii) Monthly instalment to be paid by Rose to Bank 1.
she would be paying a monthly installment of 2005.62 to bank 1.
this is the same amount that she would be paying to the hire purchase company.

(iii) Total amount of money expected to be received by Bank 2 using the reduced interest rate.
bank 2 would expect to receive total payments of 89,776.52.

(iv) Monthly installment to be paid by Rose to Bank 2.
she would be paying a monthly installment of 1951.66 to bank 2.

(v) How much money will Rose save per month using the cheapest option?
she would be saving 2005.62 minus 1951.66 = 53.96 in payments each month.

let me know if you have any questions or concerns.
theo
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