Financial Maths, STD2 EQ-Bank 17

Jaxon buys a phone for $960 using a "buy now, pay later" service. The service charges no interest, and the cost is split into 8 equal fortnightly payments.

An account-keeping fee of $4 is added to every fortnightly payment. In addition, a late fee of $12 is charged for each payment that is made late.

Calculate Jaxon's regular fortnightly payment, assuming it is paid on time. (2 marks)
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Jaxon makes all 8 payments but 2 of them are late. Calculate the total amount Jaxon pays for the phone, and hence how much more this is than the original purchase price. (2 marks)
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Show Answers Only

a. $\$124.00$

b. $\text{Total} = \$1016.00,\ \ \$56.00\ \text{more than the purchase price.}$

Show Worked Solution

a. $\text{Base instalment} = \dfrac{960}{8} = \$120.00$

$\text{Fortnightly payment} = 120+4 = \$124.00$

b. $\text{Account-keeping fees} = 8 \times \$4 = \$32.00$

$\text{Late fees} = 2 \times \$12 = \$24.00$

$\text{Total paid}= 960+32+24= \$1016.00$

$\text{Extra cost} = 1016-960 = \$56.00$

$\therefore\ \text{Jordan pays}\ \$56.00\ \text{more than the purchase price.}$