Question

Under Hire purchase system, interest is calculated on :

1. Cash price
2. Hire purchase price
3. MRP
4. Outstanding balance
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Answer 1

Under Hire purchase system, interest is calculated on Outstanding balance.

What is outstanding balance?

• Outstanding balance can be described as any kind on debt along with which an interest has to be paid.
• Outstanding balance refers to the interest that one is inclined to pay when he makes a purchase.
• The interest depends on the price of the purchase made.