Hire Purchase (Practice Questions)

Question 1
A stereo set has a cash price of MVR1400. Under a hire purchase plan, a 20% deposit
is required plus 12 monthly installments of MVR110 each month.
Calculate
(a) the deposit.
(b) the total monthly installment.
(c) the hire purchase cost on the stereo.
(d) how much could have been saved by paying cash.

Question 2
A watch listed for MVR 35,000 can be bought with a deposit of 20% and monthly
payment of MVR 1,500 for 2 years.
Required
(a) Calculate the hire purchase price.
(b) Calculate the interest paid after 2 years.
(c) Express the interest as a percentage of the cash price.

Question 3
The marked price of a freezer is MVR 3,000. There is a discount of 15% for cash
payment. To obtain the freezer on hire purchase, a deposit of MVR 595 and 18
monthly installment of MVR 159.50 each are required.
Required
(a) The cash price.
(b) The total amount paid if bought on hire purchase.
(c) The difference between the cash price and the hire purchase price as a
percentage of the marked price.
Question 4
The cash price of a laptop is MVR 1,299. It can be bought on hire purchase by
making a deposit of MVR 350 and 10 monthly payment of MVR 120 each.
Required
(a) What is the total hire purchase price of the laptop?
(b) How much is saved by buying the laptop for cash?

Question 5
Ahmed Ltd purchase a plant on hire purchase basis for MVR100,000 and makes the
payment in the following order:
Down payment MVR 20,000
The 1st installment after one-year MVR 40,000
The 2nd installment after two years MVR 20,000
And the last installment after three years.
The cash price of the plant is MVR 86,000.
Required
(a) Calculate total interest.
(b) Calculate interest included in cash installment.

Question 6
Rauf Ltd purchase a machine on hire purchase basis from Naeem Ltd, on the
following terms:
Cash down payment MVR 158,500
Four installments of MVR 221,900, MVR 206,050, MVR 190,200 and MVR 174,350
at the end of the 1st year, 2nd year, 3rd year and 4th year respectively.
The payment of cash price in each installment is uniform.
Required
(a) Calculate the total amount of interest
(b) Calculate total cash price of the machine.
Question 7
Fazeel Ltd purchase a plant on hire purchase basis for MVR200,000 and makes the
payment in the following order:
Down payment MVR 30,000
The 1st installment after one-year MVR 50,000
The 2nd installment after two years MVR 30,000
And the last installment after three years.
The cash price of the plant is MVR 96,000.
Required
(a) Calculate total interest.
(b) Calculate interest included in cash installment.

Question 8
Maya Ltd purchase a machine on hire purchase basis from Saya Ltd, on the
following terms:
Cash down payment MVR 258,500
Four installments of MVR 321,900, MVR 106,050, MVR 180,200 and MVR 164,350
at the end of the 1st year, 2nd year, 3rd year and 4th year respectively.
The payment of cash price in each installment is uniform.
Required
(a) Calculate the total amount of interest
(b) Calculate total cash price of the machine.