dd

Hire Purchase Excel Template

Prepared by Dheeraj Vaidya, CFA, FRM
dheeraj@wallstreetmojo.com

visit - www.wallstreetmojo.com
An Inc. purchased a machine on hire purchase from Z Ltd, on January 1, 2018, paying $ $80,000 immediately and agreein
three annual instalments of $80,000 each on December 31, every year. The cash price of the machine is $2,98,000 and th
vendors charge interest @ 5% per annum. Calculate the following:Hire Purchase priceTotal Interest PaidThe breakup of P
and Interest paid by the buyer to the seller every year.

Particulars Value
Cash Down Payment 80,000
Installment 80,000
Total No. of Installments 3
Hire Purchase Price 320,000
Cash Price 298,000
Total Interest 22,000

Outstanding Cash Price at Time of First Installment

Particulars Value
Total Cash Price 298000
Cash Down Payment 80000
Outstanding Cash Price at 218000
Time of First Installment

Interest on First Installment Rate of Interest

Particulars Value
Outstanding Cash Price 218,000
Interest rate 5%
Interest on First Installment 10,900
Rate of Interest

Principal Paid in First Installment

Particulars Value
Cash Down Payment 80,000
Interest on First Installment 10,900
Rate of Interest
Principal Paid in First 69,100
Installment

Outstanding Cash Price at 01/01/2019

Particulars Value
Outstanding at 1 year
nd 218000
Principal paid 69100
Outstanding Cash Price at 148,900
01/01/2019

Interst on First Installment Rate of Interest

Particulars Value
Outstanding Cash Price 148900
Interest Rate 5%
Interst on First Installment 7445
Rate of Interest

Principal Repaid in Second Installment

Particulars Value
Installment 80000
Interest Element 7445
Principal Repaid in Second 72,555
Installment

Outstanding Cash Price at 01/01/2020

Particulars Value
Outstanding at 3 year
nd 148900
Principal paid 72555
Outstanding Cash Price at 76,345
01/01/2020

Interest Paid in Third Installment

Particulars Value
Last Installment 80000
Principal payable 76345
Interest Paid in Third 3655
Installment
$80,000 immediately and agreeing to pay
f the machine is $2,98,000 and the
otal Interest PaidThe breakup of Principal
Calculate Cash Price with the following information: -Hire Purchase price =$90,000.Three yearly equal instalments
(Principal + Interest)Interest Rate = 5%.The present value of $1 annuity of 3 years value @5% is 2.723.

Particulars Value
Annual Installment $30,000
Interest Rate 5%
Present Value of $1 Annuity of 3 2.723
Years Value @5%
Hire Purchase Price $81,690
Cash Price $81,697
ual instalments
23.