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1.8 I) Deposit Questions
1.8 I) Deposit Questions
In this section we are going to be looking at questions whereby an individual buys an item. They then pay for the item by paying a deposit and a certain number of equal payments. We are usually given the cost of the item, the amount for the deposit, the number of equal payments and asked to find the amount for each of the equal payments. We find the amount for each of the equal payments by taking the deposit off of the cost of the item. We then divide the amount that is left to pay (the remaining balance) by the number of equal payments that our individual is making. This will all make more sense after we have had a look at the examples in this section.
Example 1
David purchases a van for £24,000.
He pays a deposit of £6,000 and he pays the rest in 12 equal payments.
Work out the amount for each of the equal payments.
The first step in answering this question is to take the deposit that David pays off of the purchase price of the van. We are told that the deposit that David pays is £6,000 and the cost of the van is £24,000.
David purchases a van for £24,000.
He pays a deposit of £6,000 and he pays the rest in 12 equal payments.
Work out the amount for each of the equal payments.
The first step in answering this question is to take the deposit that David pays off of the purchase price of the van. We are told that the deposit that David pays is £6,000 and the cost of the van is £24,000.
This tells us that the amount of money that David still has to pay after paying the deposit (the remaining balance) is £18,000. David is going to pay this balance through 12 equal payments. We can find the amount for each of these equal payments by dividing the remaining balance (£18,000) by the number of equal payments (12).
This tells us that each of the equal payments are £1,500.
Example 2
Questions like this can be made harder by a percentage (usually VAT) being added onto the cost of the item that the individual is purchasing. The first step in answering these types of questions is to add the percentage onto the cost of the item to find the total purchase price. We then finish off the question in the same way as the previous example; we take the deposit off to find the remaining balance, and then we divide the remaining balance by the number of equal payments. Let’s have an example.
Boris buys a boat.
The cost of the boat £12,600 plus VAT at 20%.
Boris pays a deposit of £3,500.
He pays the rest in 8 equal payments.
Work out the amount for each of the equal payments.
The first step in answering this question is to work out the purchase price of the boat, which we do by adding 20% onto the cost of the boat (£12,600). There are a few different ways that we can add 20% onto the cost of the boat. I am going to add 20% on by using the multiplier technique.
We are adding 20% onto the original cost of the boat, and the original cost of the boat is 100%. Therefore, the final cost of the boat as a percentage with VAT included is 120%.
Questions like this can be made harder by a percentage (usually VAT) being added onto the cost of the item that the individual is purchasing. The first step in answering these types of questions is to add the percentage onto the cost of the item to find the total purchase price. We then finish off the question in the same way as the previous example; we take the deposit off to find the remaining balance, and then we divide the remaining balance by the number of equal payments. Let’s have an example.
Boris buys a boat.
The cost of the boat £12,600 plus VAT at 20%.
Boris pays a deposit of £3,500.
He pays the rest in 8 equal payments.
Work out the amount for each of the equal payments.
The first step in answering this question is to work out the purchase price of the boat, which we do by adding 20% onto the cost of the boat (£12,600). There are a few different ways that we can add 20% onto the cost of the boat. I am going to add 20% on by using the multiplier technique.
We are adding 20% onto the original cost of the boat, and the original cost of the boat is 100%. Therefore, the final cost of the boat as a percentage with VAT included is 120%.
We convert 120% into a multiplier by dividing by 100.
Our multiplier is 1.2
We now multiply the multiplier (1.2) by the cost of the boat (£12,600) to find the purchase price of the boat with VAT included.
We now multiply the multiplier (1.2) by the cost of the boat (£12,600) to find the purchase price of the boat with VAT included.
This tells us that the purchase price of the boat is £15,120.
The next step is to take the deposit that Boris pays off of the purchase price. We are told in the question that the deposit that Boris pays is £3,500. So, we take £3,500 off of the purchase price with VAT included (£15,120).
The next step is to take the deposit that Boris pays off of the purchase price. We are told in the question that the deposit that Boris pays is £3,500. So, we take £3,500 off of the purchase price with VAT included (£15,120).
This tells us that the remaining balance that Boris has to pay is £11,620.
Boris is going to pay the remaining balance through 8 equal payments. We work out the amount for each of these equal payments by dividing the remaining balance (£11,620) by 8 (the number of equal payments).
Boris is going to pay the remaining balance through 8 equal payments. We work out the amount for each of these equal payments by dividing the remaining balance (£11,620) by 8 (the number of equal payments).
Therefore, each equal payment is £1,452.50.