Mikayla wants a new bike.it costs R1750,but her parents said she must buy it herself. She finds out that electronics shop has hire purchase contract at 11.5% interest for 3 years. She will need to pay a 15% deposit. Calculate her monthly instalments over 3 years

Answer 1

The deposit would be 15% of R1750:

R1750 x 0.15 = R262.50

So Mikayla would need to pay R262.50 upfront.

The remaining amount that she needs to finance is:

R1750 - R262.50 = R1487.50

To calculate the monthly instalments, we need to use the formula for compound interest:

A = P*(1 + r/n)^(n*t)

Where:
A = the end amount
P = the initial amount
r = the annual interest rate
n = the number of times interest is compounded per year
t = the time period in years

Mikayla will be paying off her bike over 3 years, so t = 3.

The interest rate is 11.5%, but we need to divide this by the number of times per year that interest is compounded. Let's assume it's compounded monthly, so n = 12.

r = 11.5% / 12 = 0.00958333 (to 8 decimal places)

Now we can plug in the numbers:

A = R1487.50*(1 + 0.00958333/12)^(12*3)
A = R1781.96

So Mikayla will end up paying R1781.96 over 3 years.

To calculate the monthly instalments, we can divide this amount by the number of months over the 3-year period:

R1781.96 / (3*12) = R49.22

So Mikayla's monthly instalments will be R49.22.