Question

Peter bought a car for $6,800,000.00. He later put it up for sale at 8,800,000.00. He agreed to sell it for an initial payment of 20% of the price and balance paid at 15%. Simple interest per annum in twelve monthly equal installments. Calculate:
a. The amount paid every month
b. The total amount Ruby paid for the car
c. The percentage profit peter made on the cost price of the car

Answer 1

Given:
- Cost price = 6,800,000.00
- Sale price = 8,800,000.00
- Initial payment = 20% of sale price
- Balance charged simple interest 15% p.a. for 12 months, paid in 12 equal monthly installments

1) Initial payment = 20% × 8,800,000 = 1,760,000.00
Balance principal = 8,800,000 − 1,760,000 = 7,040,000.00

Interest on balance = 7,040,000 × 0.15 × 1 = 1,056,000.00
Total to be repaid in installments = 7,040,000 + 1,056,000 = 8,096,000.00

a) Monthly installment = 8,096,000 ÷ 12 = 674,666.67 (rounded to cents).
(Exact value = 674,666 2/3.)

b) Total amount Ruby paid = initial payment + installments total
= 1,760,000 + 8,096,000 = 9,856,000.00

c) Peter’s profit = total received − cost = 9,856,000 − 6,800,000 = 3,056,000
Percentage profit = (3,056,000 ÷ 6,800,000) × 100 ≈ 44.94%

Summary:
a. Monthly payment ≈ 674,666.67
b. Total paid = 9,856,000.00
c. Profit ≈ 3,056,000.00 → ≈ 44.94% of cost price