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    NEW TUTORIAL INSTALMENT PURCHASES - AnsScheme

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    Diana Yunus Diana
    The document provides examples of calculating installment purchases using constant ratio formulas. It includes calculating: 1) Cash prices, down payments, original balances, and interest charged for various purchases over periods of time with given monthly payments and interest rates. 2) Monthly payments using the constant ratio formula for purchases with reducing balance interest rates over set periods of time. 3) Installment prices that include the total interest charged added to the original cash price.

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    NEW TUTORIAL INSTALMENT PURCHASES - AnsScheme

    Uploaded by

    Diana Yunus Diana
    485 views7 pages
    The document provides examples of calculating installment purchases using constant ratio formulas. It includes calculating: 1) Cash prices, down payments, original balances, and interest charged for various purchases over periods of time with given monthly payments and interest rates. 2) Monthly payments using the constant ratio formula for purchases with reducing balance interest rates over set periods of time. 3) Installment prices that include the total interest charged added to the original cash price.

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    NEW TUTORIAL INSTALMENT PURCHASES_AnsScheme

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    The document provides examples of calculating installment purchases using constant ratio formulas. It includes calculating: 1) Cash prices, down payments, original balances, and interest charged for various purchases over periods of time with given monthly payments and interest rates. 2) Monthly payments using the constant ratio formula for purchases with reducing balance interest rates over set periods of time. 3) Installment prices that include the total interest charged added to the original cash price.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    485 views7 pages

    NEW TUTORIAL INSTALMENT PURCHASES - AnsScheme

    Uploaded by

    Diana Yunus Diana
    The document provides examples of calculating installment purchases using constant ratio formulas. It includes calculating: 1) Cash prices, down payments, original balances, and interest charged for various purchases over periods of time with given monthly payments and interest rates. 2) Monthly payments using the constant ratio formula for purchases with reducing balance interest rates over set periods of time. 3) Installment prices that include the total interest charged added to the original cash price.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 7

    TUTORIAL : INSTALMENT PURCHASES

    1) Mr. Tan bought a scanner through an installment scheme with an interest rate of 5%
    on the original balance. He paid RM 98.50 monthly for one and a half years. If he paid
    200 as down payment, calculate the cash price of the scanner. (4 marks)
    2) Liza borrowed RM 70,000 from Agro Bank to buy a shop. The interest charged was
    3.5% on the reducing balance. She settled the debt for 9 years through equal
    monthly deduction from her salary. Use the Constant Ratio Formula, find

    i) the total interest charged. (2 marks)

    ii) the monthly payment. (2 marks)

    r = 0.035, n = 9  12 = 108, M = 12, CP = 70, 000

    B+I
    ii) R= √
    n

    70,000 + 11,127.08
    = √√= RM 751.18 √
    108
    3) The cash price of a car is RM62,000. Under an installment plan, a buyer has to pay
    a 10% down payment and the balance has to be repaid in 10 years. If the interest is
    5% on reducing balance, calculate

    i) the amount of interest charged using the constant ratio formula


    (3 marks)

    ii) the monthly payment


    (2 marks)

    iii) the installment price of the car (1 mark)

    i) 𝑂𝐵 = 𝐶𝑃 − 𝐷𝑃

    = 6200 − [10% × 62000]

    = 55800

    2𝑀𝐼
    𝑟= 𝐵(𝑛+1)

    2(12)𝐼
    5% = 55800 (120+1)

    𝐼 = 14,066.25

    ii)

    𝑂𝐵+𝐼
    𝑅= 𝑛

    62000+14,066 .25
    = 120

    = 𝑅𝑀 633.89

    iii)

    𝐼𝑃 = 𝐶𝑃 + 𝐼

    = 62000 + 14,066.25

    = 𝑅𝑀 76,066.25
    4) Allan borrowed a certain amount of money from a finance company to purchase a car.
    He has to pay RM880 monthly for 5 years.
    i) How much did he borrow if the finance company charged interest at 6.5 % per
    annum on the original balance? (3 marks)

    OB = amount borrowed (P)

    ii) If Allan made a 15% down payment, find the cash price of the car. (2 marks)

    DP = 15% x CP
    CP = DP + OB
    ✓✓
    CP = 15%CP + 39849.06

    39849.06
    = ✓
    85%

    = RM46,881.25 ✓
    5) Alice wanted to buy Samson Smartphone that is listed at RM3,999. Through an
    installment plan, she has to pay down payment of 10%, and the balance has to be
    repaid in 18 monthly payments. She is given 2 options of the installment plan.

    Option Interest Charged

    1 6% on original balance

    2 8% on reducing balance using constant ratio


    formula

    Calculate

    i) the monthly payment for each option (6 marks)

    CP = RM3999

    DP = 10%(3,999) = RM399.90

    OB = RM3599.10

    Option Interest (RM) = OB + I


    Monthly payment R =
    n
    1 I=3599.10(6%)(18/12) RM217.95 ✓✓
    = 323.92
    ✓ ✓ ✓
    ✓
    2 RM212.61 ✓✓

    ii) based on monthly payment, what is the best option? Why? (1 mark)

    based on monthly payment, option 2 ✓ is the best because it’s the cheapest.
    6) A smartwatch can be purchased through an installment scheme in which RM250
    down payment was needed. The interest charged is 6% per annum on the original
    balance. The balance needed to be paid RM89 per month for two years.

    i) Find the amount of the balance. (3 marks)

    ii) Find the cash price of the smartwatch. (2 marks)

    CP = OB + DP ✓
    = 1907.14 + 250 ✓

    Cash price = RM2157.14 ✓✓


    7) Minho bought a car for RM102,000. He paid a 10% down payment and the balance
    was settled by making 108 monthly payments with 3.7% reducing balance rate. By
    using Constant Ratio Formula;

    i) Calculate the amount of interest. (4 marks)

    OB = CP – DP

    = 102000 – (0.1 x 10200) ✓✓

    = RM91800 ✓

    ii) Find Minho’s monthly payment. (2 marks)

    𝑂𝐵 + 𝐼
    R =
    𝑛
    91800 + 15426 .23
    = ✓✓
    108

    = RM992.84 ✓✓

    iii) Find the installment price for the car. (2 marks)

    Installment price, IP = CP + I
    = 102000 + 15426.23 ✓✓

    = RM117426.23 ✓✓

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