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Financial Maths, STD2 EO-Bank 24

Ravi takes out a short-term loan to buy a laptop with a cash price of $1800.

The loan has the following terms:

  • Establishment fee: $110 charged when the loan starts
  • Monthly account-keeping fee: $40
  • Weekly repayments of $75 over 6 months (26 weeks)
  1. Calculate the total amount Ravi will pay back over the term of the loan.   (2 marks)

  2. How much more than the cash price does Ravi pay for the laptop?   (1 mark)

Show Answers Only

a.    \(\$2300\)

b.    \(\$500\)

Show Worked Solution

a.    \(\text{Account-keeping fees} = 40 \times 6 = \$240\)

\(\text{Weekly repayments} = 75 \times 26 = \$1950\)

\(\text{Total paid} = 110+240+1950= \$2300\)
  

b.    \(\text{Extra paid} = 2300-1800 = \$500\)