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?

**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 \[ \text{Total Repayment} = P + \text{Interest} = 2500 + 700 = 3200 \] --- **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 \[ \text{Total Payment} = \text{Amount Financed} + \text{Interest} = 20000 + 8400 = 28400 \] --- **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 \( R788.89 \).