QUESTION 5 - FINANCE 5.1) A loan of R 2500 is taken out at a simple interest rate of $$ 7 \% $$ per annum. If the loan is for period of 4 years, how much money must be repaid at the end of a period of 4 years? (2) 5.2) Leila purchases a bedroom suite for $$ R 25000 $$. In order to pay for it, she takes out a hire purchase loan. The interest on the loan is $$ 14 \% $$ per annum for a period of 3 years and she pays a cash deposit of $$ R 5000 $$. 5.2.1) How much will Leila pay over the 3 years excluding the cash deposit? (2) 5.2.2) If Leila repays the loan by equal monthly payments, how much will she pach month?

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**5.1) Calculation of Total Repayment for the Loan**  
Given:  
- Principal, $$ P = 2500 $$  
- Simple interest rate, $$ r = 7\% = 0.07 $$ per annum  
- Time period, $$ t = 4 $$ years

Step 1: Calculate the simple interest using the formula  
$$
\text{Interest} = P \times r \times t = 2500 \times 0.07 \times 4
$$

Step 2: Compute the interest  
$$
2500 \times 0.07 = 175 \quad \text{and} \quad 175 \times 4 = 700
$$  
So, the interest is $$ 700 $$.

Step 3: Calculate the total amount to be repaid  
$$
\text{Total Repayment} = P + \text{Interest} = 2500 + 700 = 3200
$$

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**5.2) Hire Purchase Loan for the Bedroom Suite**

**5.2.1) Total Payment Over 3 Years (Excluding Cash Deposit)**  
Given:  
- Purchase price = $$ R25000 $$  
- Cash deposit = $$ R5000 $$

Step 1: Calculate the amount financed  
$$
\text{Amount Financed} = 25000 - 5000 = 20000
$$

Given:  
- Simple interest rate, $$ r = 14\% = 0.14 $$ per annum  
- Time period, $$ t = 3 $$ years

Step 2: Calculate the interest on the financed amount  
$$
\text{Interest} = P \times r \times t = 20000 \times 0.14 \times 3
$$

Step 3: Compute the interest  
$$
20000 \times 0.14 = 2800 \quad \text{and} \quad 2800 \times 3 = 8400
$$  
So, the interest is $$ 8400 $$.

Step 4: Calculate the total payment required over the 3 years  
$$
\text{Total Payment} = \text{Amount Financed} + \text{Interest} = 20000 + 8400 = 28400
$$

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**5.2.2) Calculation of Monthly Payments**

Step 1: Determine the number of months in 3 years  
$$
\text{Number of Months} = 3 \times 12 = 36
$$

Step 2: Calculate the monthly payment  
$$
\text{Monthly Payment} = \frac{\text{Total Payment}}{\text{Number of Months}} = \frac{28400}{36}
$$

Step 3: Compute the value  
$$
\frac{28400}{36} \approx 788.89
$$

Thus, the monthly payment is approximately $$ R788.89 $$.
**5.1) Total Repayment** A loan of R2500 at 7% per annum for 4 years requires a repayment of R3200. **5.2) Hire Purchase Loan Details** - **5.2.1) Total Payment Over 3 Years (Excluding Deposit):** R28,400 - **5.2.2) Monthly Payment:** Approximately R788.89

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