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Hire purchase in ffm

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Hire purchase in ffm

  • This topic has 1 reply, 2 voices, and was last updated 9 months ago by P2-D2.
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    Posts
  • September 21, 2021 at 5:03 pm #636158
    hadif
    • Topics: 1
    • Replies: 0
    • ☆

    hello, i have some problem for understanding this question and answer in my textbook , i hope you can explain this to me

    For example, if a company buys a car costing $10,000 under an HP(hire purchase) agreement, the car supplier might provide HP finance over a three year period at an interest cost of 10%, and the HP payments might be say, as follows

    capital element($) interest element($) total HP payment($)
    Year 0 : down payment 2540 0 2540
    year 1 2254 746 3000
    year 2 2479 521 3000
    year 3 2727 273 3000
    total 10000 1540 11540

    so the part that i dont understand is where does capital element year 1,2,3 come from? does total HP for year 1,2,3 need to be 3000?

    September 21, 2021 at 7:52 pm #636174
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 6115
    • ☆☆☆☆☆

    Hi,

    Where has the example come from? It doesn’t look like there is sufficient information in the narrative to be able to do what they’ve done, plus you wouldn’t see anything like this in the exam. I’d therefore not concern yourself with it.

    Thanks

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