Instalment Buying

Some people prefer to pay for expensive goods in instalments, which means that they make small payments over a period of time. The final cost when paying in instalments is usually higher when compared to paying for the item immediately.

Example 1.4.1:

The cost of a PS5 Controller is either ₦65 000 in cash or a deposit of 10% of the cash price and 12 monthly payments of ₦5 750. Find the difference between the instalment price and the cash price.

Solution

Instalment price = deposit + instalments

deposit = \( \scriptsize \text{₦}65,000 \: \times \: \normalsize \frac{10}{100} \)

deposit = \( \scriptsize ₦6,5000 \)

instalments = (12 × ₦5 750)

Instalment price = ₦6 500 + (12 × ₦5 750)

= ₦6 500 + (12 × ₦5 750)

= ₦6 500 + ₦69 000

= ₦75 500

Price difference = Instalment price – cash price

Price difference = ₦75 500 – ₦65 000

= ₦10 500