Refer To The Information Below To Answer Questions 7 And 8.The Cash Price Of A Table Is K200. To Buy It On Hire-purchase, A Deposit Of K50 Is Payable Plus Ten Equal Installments Of K21.7. Work Out The Amount Paid For The Table When It Is Bought On

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Introduction

Hire-purchase agreements are a common method of purchasing goods, such as furniture, electronics, and vehicles, without paying the full cash price upfront. In this article, we will analyze a hire-purchase agreement for a table and calculate the total amount paid when the agreement is completed.

The Hire-Purchase Agreement

The cash price of the table is K200. To buy it on hire-purchase, a deposit of K50 is payable, and ten equal installments of K21.7 are required. The total amount paid for the table when it is bought on hire-purchase can be calculated using the following formula:

Total Amount Paid = Deposit + (Number of Installments x Installment Amount)

Calculating the Total Amount Paid

To calculate the total amount paid, we need to substitute the given values into the formula:

Total Amount Paid = K50 (Deposit) + (10 x K21.7 (Installment Amount))

First, we multiply the number of installments (10) by the installment amount (K21.7):

10 x K21.7 = K217

Next, we add the deposit (K50) to the result:

K50 + K217 = K267

Therefore, the total amount paid for the table when it is bought on hire-purchase is K267.

Conclusion

In this article, we analyzed a hire-purchase agreement for a table and calculated the total amount paid when the agreement is completed. By using the formula for calculating the total amount paid, we found that the total amount paid is K267, which is K67 less than the cash price of the table (K200 + K67 = K267).

Key Takeaways

  • Hire-purchase agreements involve paying a deposit and a series of installments to purchase a good.
  • The total amount paid for a good on hire-purchase can be calculated using the formula: Total Amount Paid = Deposit + (Number of Installments x Installment Amount).
  • In this example, the total amount paid for the table on hire-purchase is K267, which is K67 less than the cash price of the table.

Real-World Applications

Hire-purchase agreements are commonly used in various industries, including:

  • Furniture and appliances: Many retailers offer hire-purchase agreements for furniture and appliances, allowing customers to purchase these items without paying the full cash price upfront.
  • Vehicles: Hire-purchase agreements are often used to purchase vehicles, such as cars and motorcycles.
  • Electronics: Hire-purchase agreements can be used to purchase electronic devices, such as computers and smartphones.

Mathematical Concepts

This article involves the following mathematical concepts:

  • Arithmetic operations: addition, multiplication, and subtraction.
  • Formulae: the formula for calculating the total amount paid on hire-purchase.
  • Problem-solving: the ability to analyze a problem and calculate the solution.

Future Research Directions

Future research directions in this area could include:

  • Analyzing the impact of hire-purchase agreements on consumer behavior and financial stability.
  • Developing new mathematical models to calculate the total amount paid on hire-purchase agreements.
  • Investigating the use of hire-purchase agreements in different industries and countries.
    Frequently Asked Questions (FAQs) about Hire-Purchase Agreements ====================================================================

Q1: What is a hire-purchase agreement?

A hire-purchase agreement is a type of financing arrangement where a customer purchases a good by paying a deposit and a series of installments over a specified period.

Q2: How does a hire-purchase agreement work?

In a hire-purchase agreement, the customer pays a deposit to secure the purchase of the good, and then makes regular installments over a specified period. The customer becomes the owner of the good once all the installments have been paid.

Q3: What are the benefits of a hire-purchase agreement?

The benefits of a hire-purchase agreement include:

  • Lower upfront costs: The customer only needs to pay a deposit, rather than the full cash price of the good.
  • Flexibility: Hire-purchase agreements often offer flexible payment plans, allowing customers to choose the frequency and amount of their payments.
  • Ownership: Once all the installments have been paid, the customer becomes the owner of the good.

Q4: What are the risks of a hire-purchase agreement?

The risks of a hire-purchase agreement include:

  • Higher total costs: Hire-purchase agreements often involve higher total costs than paying the full cash price upfront.
  • Penalties for late payments: Customers who fail to make payments on time may be subject to penalties and fees.
  • Loss of ownership: If the customer fails to make payments, the lender may repossess the good and sell it to recover their losses.

Q5: How do I calculate the total amount paid on a hire-purchase agreement?

To calculate the total amount paid on a hire-purchase agreement, you need to add the deposit to the total amount of the installments. The formula is:

Total Amount Paid = Deposit + (Number of Installments x Installment Amount)

Q6: What happens if I miss a payment on a hire-purchase agreement?

If you miss a payment on a hire-purchase agreement, you may be subject to penalties and fees. The lender may also repossess the good and sell it to recover their losses. It's essential to communicate with the lender and make arrangements to catch up on payments as soon as possible.

Q7: Can I cancel a hire-purchase agreement?

In some cases, you may be able to cancel a hire-purchase agreement, but this will depend on the terms and conditions of the agreement. It's essential to review the agreement carefully and understand your rights and obligations before signing.

Q8: How do I choose the right hire-purchase agreement for me?

When choosing a hire-purchase agreement, consider the following factors:

  • The total amount paid: Compare the total amount paid on different agreements to ensure you're getting the best deal.
  • The interest rate: Check the interest rate charged on the agreement and compare it to other options.
  • The repayment terms: Consider the frequency and amount of payments, as well as any penalties for late payments.
  • The lender's reputation: Research the lender's reputation and read reviews from other customers to ensure you're dealing with a reputable company.

Conclusion

Hire-purchase agreements can be a convenient and flexible way to purchase goods, but it's essential to understand the terms and conditions of the agreement before signing. By asking the right questions and doing your research, you can choose the right hire-purchase agreement for your needs and avoid any potential pitfalls.