Question

A washing machine selling for 𝑅𝑀 600 cash was purchased through an instalment
plan in which a 15 % down payment was made. The buyer had to make 25 weekly
payments of 𝑅𝑀 22 each to settle the balance. Calculate the:
i. instalment price

ii. total interest charged

iii. flat rate that was charged

iv. APR that was charged

Answer 1

remaining balance (present value of the loan) = .85(600) = 510
let the weekly rate be i, expressed as a decimal
then
22(1 - (1+i)^-25)/i = 510
very nasty equation to solve, we need some "tools", let's use Wolfram
https://www.wolframalpha.com/input/?i=solve+22%281+-+%281%2Bx%29%5E-25%29%2Fx+%3D+510

(I had to change the i to x, it assumed i=√-1 )

found a weekly rate of .00589465 or a rate of .30652 or a whopping annual rate of 30.7%

check:
22(1 - 1.00589465^-25)/.00589465) = 510.00

Don't know exactly what you mean by "flat rate" and APR, since I don't know the laws in
your country. The above is done using actuarial math

Your dealer probably used the following argument:
Dealer: "after downpayment of 15% you still owe 600-90 = RM 510
you made 25 payments of 22 , that is, you paid RM 550
So "we charge you only" RM 40 in interest, not bad since that is
40/510 or .07843 or 7.843%
You say: Ahh, but that is only for 25 weeks or only about 1/2 year.
Dealer says: ok, you are right, so it would be about 15.7% per year, which is still
better than a credit card, right?

What do you think?