An article can be bought for cash at $20,000.00. A customer bought it on hire purchase by paying a deposit of 20%. An interest of 10% was charged on the remaining balance and he was required to pay the balance in 15 monthly installments.

Question

1.What is the interest charged?
2.The amount he paid for each monthly installment?
3.The amount he paid for the article at hire purchase?

Answer 1

0.2 * 20,000 = $4,000 deposit

$16,000 * 0.1 = 1,600 interest

(16,000 + 1,600) / 15 = $_______ monthly installment