a down payment of sh.2300 followed by 12 monthly installments of sh.490.Calculate the carrying charge.2.The cash price of a cooker is sh.9000. A customer bought the cooker bypaying 15 monthly installments of sh.950 each.Calculate;a)Hire purchase priceb)The carrying chargec)The rate of interest
Help solve the question
To calculate the carrying charge, we need to understand that it represents the total cost of financing the purchase. It includes both the down payment and the monthly installments.
1. For the first question:
The down payment is sh.2300, and the monthly installments are sh.490. Since there are 12 monthly installments, the total cost can be calculated as:
Total cost = down payment + (monthly installment x number of months)
Total cost = sh.2300 + (sh.490 x 12)
Total cost = sh.2300 + sh.5880
Total cost = sh.8180
Therefore, the carrying charge is sh.8180.
2. For the second question:
The cash price of a cooker is sh.9000. The customer made 15 monthly installments of sh.950 each.
a) To calculate the hire purchase price, we add the total value of the installments to the cash price:
Hire purchase price = cash price + (monthly installment x number of months)
Hire purchase price = sh.9000 + (sh.950 x 15)
Hire purchase price = sh.9000 + sh.14250
Hire purchase price = sh.23250
Therefore, the hire purchase price is sh.23250.
b) To calculate the carrying charge, we subtract the cash price from the hire purchase price:
Carrying charge = hire purchase price - cash price
Carrying charge = sh.23250 - sh.9000
Carrying charge = sh.14250
Therefore, the carrying charge is sh.14250.
c) To calculate the rate of interest, we can use the following formula:
Rate of interest = (Carrying charge / Cash price) x 100
Rate of interest = (sh.14250 / sh.9000) x 100
Rate of interest = 1.5833 x 100
Rate of interest = 158.33%
Therefore, the rate of interest is approximately 158.33%.