document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=1194189>Question 1194189</A>: <I><SPAN STYLE=\"word-break: break-all;\"> 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 deposit was required). Use the given information to calculate the:<BR>\n" );
document.write( "(a) Total amount of money expected to be paid to the Hire Purchase Company over the years. (5)<BR>\n" );
document.write( "(b) Monthly installment to be paid by Rose. (5)<BR>\n" );
document.write( "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:<BR>\n" );
document.write( "(i) Total amount of money expected to be received by Bank 1. (5)<BR>\n" );
document.write( "(ii) Monthly instalment to be paid by Rose to Bank 1. (5)<BR>\n" );
document.write( "(iii) Total amount of money expected to be received by Bank 2 using the reduced interest rate. (5)<BR>\n" );
document.write( "(iv) Monthly installment to be paid by Rose to Bank 2. (5)<BR>\n" );
document.write( "(v) How much money will Rose save per month using the cheapest option? </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #848527 by </B><A HREF=/tutors/aboutme.mpl?userid=parmen><B>parmen(42)</B></A><img src=\"/images/stars/stars-07.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=parmen><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/images/nopicture.jpg><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=848527\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> **a) Total Amount of Money Expected to be Paid to the Hire Purchase Company**\r<BR>\n" );
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document.write( "* **Calculate Total Repayment Period in Months:** <BR>\n" );
document.write( "   - 3 years * 12 months/year + 10 months = 46 months\r<BR>\n" );
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document.write( "* **Calculate Total Interest:**<BR>\n" );
document.write( "   - **Annual Interest:** N$75,000 * 11% = N$8,250<BR>\n" );
document.write( "   - **Total Interest (Approximate):** N$8,250 * (46/12) = N$31,625 \r<BR>\n" );
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document.write( "* **Total Amount to be Paid:**<BR>\n" );
document.write( "   - Car Price + Total Interest = N$75,000 + N$31,625 = N$106,625\r<BR>\n" );
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document.write( "**b) Monthly Installment**\r<BR>\n" );
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document.write( "* **Monthly Installment:** Total Amount to be Paid / Number of Months <BR>\n" );
document.write( "   - N$106,625 / 46 = N$2,318.37 (approximately)\r<BR>\n" );
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document.write( "**c) Bank 1 Calculations**\r<BR>\n" );
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document.write( "* **(i) Total Amount of Money Expected to be Received by Bank 1:**<BR>\n" );
document.write( "    - This would be the same as the car price: N$75,000\r<BR>\n" );
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document.write( "* **(ii) Monthly Installment to Bank 1:**<BR>\n" );
document.write( "    - This requires using a loan amortization formula or a financial calculator. <BR>\n" );
document.write( "    - **Note:** The exact formula and its application may vary slightly depending on the specific compounding method used by the bank. <BR>\n" );
document.write( "    - **General Approach:** <BR>\n" );
document.write( "        - Use the loan amortization formula to calculate the monthly payment based on the loan amount (N$75,000), interest rate (11% p.a.), and loan term (46 months).\r<BR>\n" );
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document.write( "* **(iii) Total Amount of Money Expected to be Received by Bank 2:**<BR>\n" );
document.write( "    - Same as Bank 1: N$75,000\r<BR>\n" );
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document.write( "**c) Bank 2 Calculations**\r<BR>\n" );
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document.write( "* **(iv) Monthly Installment to Bank 2:**<BR>\n" );
document.write( "    - Use the loan amortization formula with the reduced interest rate (11% - 1.5% = 9.5% p.a.), loan amount (N$75,000), and loan term (46 months).\r<BR>\n" );
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document.write( "**c) (v) Savings per Month**\r<BR>\n" );
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document.write( "* **Calculate the difference in monthly installments:**<BR>\n" );
document.write( "    - Monthly Installment to Bank 1 - Monthly Installment to Bank 2 \r<BR>\n" );
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document.write( "**Important Notes:**\r<BR>\n" );
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document.write( "* **Loan Amortization Formula:** This formula calculates the equal periodic payment required to pay off a loan over a specific term. It considers the principal amount, interest rate, and number of periods. <BR>\n" );
document.write( "* **Financial Calculators:** Many financial calculators (or online calculators) can directly compute loan payments based on the given inputs.<BR>\n" );
document.write( "* **Rounding:** Ensure proper rounding throughout the calculations to avoid significant discrepancies in the final results.\r<BR>\n" );
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document.write( "**Disclaimer:** This information is for general guidance only and may not constitute financial advice. It's crucial to consult with a financial professional for personalized and accurate calculations based on your specific circumstances and the terms and conditions of the loan agreements.<BR>\n" );
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