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Financial Maths, STD2 EQ-Bank 20_4

Idris uses a buy now, pay later payment option to make a purchase of $440. His repayments are split across 4 equal payments over 6 weeks. No interest is charged.

Idris misses his final payment and is charged a late fee of $26. Idris's payment schedule is shown, with his balance totalling $136.
 

  1. Find the total amount Idris pays for his purchase if repaying in full on 30 November 2026.  (1 mark)
  2. Idris's bank offers short-term loans where simple interest is charged at 12% per annum.
  3. Suppose Idris had borrowed $440 from the bank to make this purchase on 5 October 2026 and repaid it in full 8 weeks later.
  4. How much would Idris have saved using this approach instead of the buy now, pay later option?   (2 marks)
Show Answers Only

a.    \($466\)

b.    \($17.90\)

Show Worked Solution

a.    \(\text{If total owing paid on 30 November:}\)

\(\text{Total paid} = 110+110+110+136=$466\)
 

b.    \(r=12\%=0.12,\ \ n=\dfrac{8 \times 7}{365} = \dfrac{56}{365}\)

\(I=Prn=440 \times 0.12 \times \dfrac{56}{365} = 8.100… = $8.10 \)

\(\text{Amount saved} = 26-8.10=$17.90\)