Question 1194125
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John wants to buy a car on hire purchase for N$75,000.00 at the rate of 10% p.a. repayable using 
monthly installments for a period of 2 years and 8 months. (No deposit was required). 
Use the given information to calculate the total amount of money expected to be paid 
to the Hire Purchase Company over the years. 
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        I do not think that this problem is for simple interest.


        As this problem is worded, it is a typical loan problem and should be solved as a loan problem

        by different way comparing with the post by the other tutor.



<pre>
Use the standard formula for the monthly payment for a loan

    M = {{{P*(r/(1-(1+r)^(-n)))}}}


where P is the loan amount; r = {{{0.1/12}}} is the effective interest rate per month;
n is the number of payments (same as the number of months); M is the monthly payment.


In this problem  P = $75000;  r = {{{0.1/12}}};  n = 2*12+8 = 32 is the number of monthly payments.


Substitute these values into the formula and get the monthly payment

    M = {{{75000*(((0.1/12))/(1-(1+0.1/12)^(-32)))}}} = $2679.82  (rounded).


Thus, the monthly payment is $2679.82  (the monthly installment)


The total amount of money expected to be paid is 32 times this monthly installment

          32 * 2679.82 = 85,754.24 dollars.


The difference $85,754.24 - $75,000 = $10754.24 is the interest John pays to the Hire Purchase Company.


<U>ANSWER</U>. The total amount of money expected to be paid to the Hire Purchase Company is 85,754.24 dollars.
</pre>

Solved.