- September 21, 2021 at 5:03 pm #636158hadifMember
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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 #636174P2-D2Keymaster
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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.
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