1. **Problem 7.3:** Calculate the total interest paid over 24 months for the cellphone bought on hire purchase. 2. The hire purchase agreement charges interest of 7.5% p.a. on the cash price. 3. From previous calculations (7.2), the cash price $P$ is $4779.13$. 4. Total amount paid over 24 months is $229 \times 24 = 5496$. 5. Total interest paid $= \text{Total amount paid} - \text{Cash price} = 5496 - 4779.13 = 716.87$. --- 1. **Problem 7.4:** Calculate the new monthly instalment if the cellphone is insured at 11.5% p.a. of the cash price, with insurance cost split over 24 months and added to the monthly instalment. 2. Insurance total cost $= 11.5\% \times 4779.13 = 0.115 \times 4779.13 = 549.60$. 3. Monthly insurance cost $= \frac{549.60}{24} = 22.90$. 4. Original monthly instalment $= 229$. 5. New monthly instalment $= 229 + 22.90 = 251.90$. --- 1. **Problem 7.5:** Calculate the annual inflation rate given the cellphone price increases from $4779.13$ to $5100$ after 2 years. 2. Use the formula for compound interest/inflation rate: $$5100 = 4779.13 \times (1 + r)^2$$ 3. Divide both sides by 4779.13: $$\frac{5100}{4779.13} = (1 + r)^2$$ 4. Calculate the ratio: $$1.0669 = (1 + r)^2$$ 5. Take the square root: $$\sqrt{1.0669} = 1 + r$$ $$1.032 = 1 + r$$ 6. Solve for $r$: $$r = 1.032 - 1 = 0.032 = 3.2\%$$ --- **Final answers:** - Total interest paid: $716.87$ - New monthly instalment with insurance: $251.90$ - Annual inflation rate: $3.2\%$