2. Mrs. Sarah bought a flat screen television with a cash price of $2700 under hire purchase terms. She paid an initial deposit of 20% of the cash price and interest at 18% on the outstanding balance is charged. The amount payable is paid in 12 monthly installments. Calculate for the flat screen television:
the deposit
The amount payable
the hire purchase price
the amount of monthly installment
the difference between the hire purchase price and the cahs price
Answers
Answer:
A friend asks to borrow $300 and agrees to repay it in 30 days with 3% interest. How much interest will you earn?
P0 = $300 the principal
r = 0.03 3% rate
I = $300(0.03) = $9. You will earn $9 interest.
One-time simple interest is only common for extremely short-term loans. For longer term loans, it is common for interest to be paid on a daily, monthly, quarterly, or annual basis. In that case, interest would be earned regularly. For example, bonds are essentially a loan made to the bond issuer (a company or government) by you, the bond holder. In return for the loan, the issuer agrees to pay interest, often annually. Bonds have a maturity date, at which time the issuer pays back the original bond value.