How much is saved by paying cash for a television set that costs $350 cash but requires a deposit of $35 followed by 12 monthly payments of $30 on hire-purchase?

• A. $25
• B. $45
• C. $65
• D. $100

Answer: (B)

To determine how much is saved by paying cash instead of using hire-purchase, we first calculate the total cost associated with the hire-purchase option.

1. The initial deposit for the hire-purchase is $35.

2. After the deposit, there will be 12 monthly payments of $30. To find the total of these payments, we multiply the monthly payment by the number of months:

Total payments = $30 × 12 = $360.

3. Now, we add the deposit to the total monthly payments to find the overall cost for the hire-purchase:

Total hire-purchase cost = Deposit + Total payments

Total hire-purchase cost = $35 + $360 = $395.

Next, we compare the cash price of the television, which is $350, to the total cost of the hire-purchase, which we calculated to be $395.

To find out how much is saved by paying cash, we subtract the cash price from the total hire-purchase cost:

Savings = Total hire-purchase cost - Cash price

Savings = $395 - $350 = $45.

Therefore, paying cash saves $45 compared to opting for hire-purchase. This calculation shows that by paying upfront