The marked price of a T.V set is sh 20000. A 20% discount is allowed when buying the T.V. on cash. On hire purchase terms, only 12 monthly installments of sh 2000 each is paid. How much more does it cost to buy the T.V. set on hire purchase terms than cash?
Cash: Cost = 0.80 * 20,000 = sh 16,000.
Term: 12 * 2000 = sh 24,000.
24,000 - 16,000 = sh 8,000 more.
To find out how much more it costs to buy the TV set on hire purchase terms compared to cash, we need to calculate the total amount paid on each option.
Cash price: The marked price of the TV set is sh 20000. A 20% discount is allowed for cash purchases, so the discounted price is 80% of the marked price:
Discounted price = 80% * sh 20000 = sh 16000
Hire Purchase price: The TV set is bought on hire purchase terms with 12 monthly installments of sh 2000 each:
Total hire purchase price = 12 * sh 2000 = sh 24000
Now we can compare the cash price and the hire purchase price to find out how much more the TV set costs on hire purchase terms:
Difference = Hire Purchase price - Cash price
Difference = sh 24000 - sh 16000
Difference = sh 8000
Therefore, it costs sh 8000 more to buy the TV set on hire purchase terms compared to cash.