BUSINESS, FUR1 2004 VCAA 4-5 MC

Chen buys a new refrigerator. The advertised price was `$2 700`. He chooses to pay a deposit of `$500` and monthly repayments of `$115` over `2` years.

Part 1

Under this arrangement, the total cost of the refrigerator is

A. $2 200

B. $2 760

C. $3 200

D. $3 260

E. $4 260

Part 2

The annual flat rate of interest paid is closest to

A. 10.4%

B. 12.2%

C. 12.7%

D. 20.7%

E. 25.4%

Show Answers Only

`text(Part 1:)\ D`

`text(Part 2:)\ C`

Show Worked Solution

`text(Part 1)`

`text(Total cost)`	`= 500 + (115 xx 24)`
	`= $3260`

`=> D`

`text(Part 2)`

`text(Interest amount)`	`= 3260 − 2700 − 500`
	`= $560`

`text(For interest rate, using)\ \ I = (PrT)/100`

`text(Now)\ P`	`= 2700 − 500`	`($500\ text(deposit paid))`
	`= 2200`

`:.\ 560`	`= ((2200)(r)(2))/100`
`r`	`= (560 xx 100)/(2200 xx 2)`
	`= 12.7272…`
	`≈ 12.7`

`:.\ text(Flat interest rate is 12.7%)`

`=> C`