Caravan Credit Price Calculation
What is the total credit price of the caravan?
Emma is buying a caravan with a cash price of £12000. She purchases it on credit with a 15% deposit of the cash plus 36 monthly instalments of £340. Can you show clearly that the total credit price of the caravan is £14040?
Answer:
To find the total credit price for the caravan, calculate a 15% deposit from the cash price of £12,000 and add it to the total of 36 monthly instalments of £340 each. The total comes to £14,040, confirming the student's assertion.
Explanation: The question involves calculating the total cost of purchasing an item on credit, which is a common scenario in financial mathematics. To verify the total credit price of the caravan, one must calculate the initial deposit and add it to the sum of all monthly instalments.
First, we calculate the deposit which is 15% of £12,000:
Deposit = 15% of £12,000 = 0.15 × £12,000 = £1800
Next, we calculate the total of the monthly instalments:
Total monthly payments = 36 monthly instalments × £340 per month = £12,240
Finally, we add the deposit to the total of the monthly payments to find the total credit price:
Total credit price = Deposit + Total monthly payments = £1800 + £12,240 = £14,040
As we can see, the total credit price that Emma will have paid after all instalments is indeed £14,040.