The cash price of a new care is $34700. A person pays a deposit of 20% and agrees to pay the balance over 3 years at a flat interest rate of 14% per annum. Calculate:
a) the deposit
b) the balance owing after the deposit
c) the interest on the balance owing
d) the total amount owing
e) the monthly instalment or repayment.
To solve this problem, follow these steps:
Step 1: Calculate the deposit.
The deposit amount is 20% of the cash price.
Deposit = 20/100 * $34700 = $6940.
Step 2: Calculate the balance owing after the deposit.
Subtract the deposit amount from the cash price.
Balance owing = $34700 - $6940 = $27760.
Step 3: Calculate the interest on the balance owing.
The interest rate is 14% per annum, which means it applies for the entire year.
Interest on the balance = 14/100 * $27760 = $3882.40.
Step 4: Calculate the total amount owing.
The total amount owing is the balance owing plus the interest.
Total amount owing = $27760 + $3882.40 = $31642.40.
Step 5: Calculate the monthly instalment or repayment.
Since the balance is to be paid over 3 years (36 months), divide the total amount owing by the number of months.
Monthly instalment = $31642.40 / 36 = $878.40.
So, the answers to the questions are:
a) The deposit is $6940.
b) The balance owing after the deposit is $27760.
c) The interest on the balance owing is $3882.40.
d) The total amount owing is $31642.40.
e) The monthly instalment or repayment is $878.40.