A bicycle is on sale price for $300 it can be brought through a hire purchase with a deposit of $60 and 10% interest the outstanding balance, to prepaid in 10 monthly installments calculate:
a)the amount of each monthly instalment
b)the total cost of buying the bicycle by hire purchase

a) $26.4

b) $324

Step-by-step explanation:

Hire purchase is the purchase of an item which can be paid instalmentally.

The bicycle costs $300 for an instant purchase.

For a hire purchase, a $60 deposit must be made and the rest paid instalmentally over 10 months. An interest of 10% is included in the outstanding balance

The outstanding balance after paying deposit= $300 - $60 = $240

Hence, 10% of 240 = 10/100 × 240 = 24

An interest of $24 is added.

Therefore, a total of $240 + $24 = $264 will be paid for the next 10 months.

a) Hence, the amount to be paid in instalment each month is $264/10 = $26.4

b) the total cost of buying the bicycle by hire purchase= deposit amount + instalment price

= $60 + $264

= $324

Hence, a total of $324 will be paid for the bicycle by hire purchase.

N.B: $300 is the sale price + $24 interest

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