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Financial Maths, STD2 EQ-Bank 20_2

Tane uses a buy now, pay later payment option to make a purchase of $200. His repayments are split across 4 equal payments over 6 weeks. No interest is charged.

Tane misses his final payment and is charged a late fee of $22. Tane's payment schedule is shown, with his balance totalling $72.

  1. Find the total amount Tane pays for his purchase if repaying in full on 1 June 2026.   (1 mark)
  2. Tane's bank offers short-term loans where simple interest is charged at 14% per annum.
  3. Suppose Tane had borrowed $200 from the bank to make this purchase on 6 April 2026 and repaid it in full 7 weeks later.
  4. How much would Tane have saved using this approach instead of the buy now, pay later option?   (2 marks)
Show Answers Only

a.    \($222\)

b.    \($18.24\)

Show Worked Solution

a.    \(\text{If total owing paid on 1 June:}\)

\(\text{Total paid} = 50+50+50+72=$222\)
 

b.    \(r=14\%=0.14,\ \ n=\dfrac{7 \times 7}{365} = \dfrac{49}{365}\)

\(I=Prn=200 \times 0.14 \times \dfrac{49}{365} = 3.758… = $3.76 \)

\(\text{Amount saved} = 22-3.76=$18.24\)