Name: Shivan McDonald

Candidate:

Class: 5 Science

Teacher: Mr Ramdin
 TITLE OF PROJECT

An investigation to determine the best hire purchase agreement for my needs.

Introduction………………………………………………………..1

Method Of Data Collection…………………………………….......2

Presentation of Data…………………………………………...……5

Analysis of Data…………………………………………………….8

Discussion of Feelings………………………………………………10

Conclusion…………………………………………………………...11
 Introduction

I've been a homeowner for 12 years, and a few of my household appliances need to be

replaced. However, I am still paying my monthly home mortgage payments. These monthly

payments represent 28% of my monthly salary. As a result,

It would be impractical to pay for my new furnishings with cash. I intended to conduct a

mathematical investigation into a few hire purchase plans available to customers.

Hire purchase agreements are similar to rent-to-own transactions in that they allow the

consumer to purchase an item without having all of the funds available. Customers with bad

credit can benefit from hire purchase. The cost of expensive items that they would otherwise

be unable to afford is spread out over a long period of time under such an agreement.

Ownership is not transferred until the agreement expires. Furthermore, items can be

repossessed more easily if the buyer fails to make timely payments.

Hire purchase agreements enable businesses with limited working capital to deploy assets.

Businesses that require large, expensive machinery, as well as startups with little collateral,

may use hire purchase agreements to obtain a credit rating.

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 METHOD OF DATA COLLECTION

I needed a TV and Sofa set. After reading the newspaper and browsing the net I came across

two items on Courts website. The items are as following:

● Columbus Sectional/ 6 Piece/ Cobblestone @ TTD $14,999.00

● Samsung Smart TV/ 50''/ UHD 4K @ TTD $5,299.00

The four higher purchase plans are as follows: -

Flexi Complete

• 23.99% per annum

• 24 months repayment

• additional processing fee which is 2.5% of total value

Flexi Pass

• 11.99% per annum

• 15 months repayment

• additional processing fee which is 2.5% of total value

Flexi Home

• 33.99% per annum

• 60 months repayment

• additional processing fee which is 2.5% of total value

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Flexi Easy

• 15.99% per annum

• 18 months repayment

• additional processing fee 2.5% of total value, whichever is higher

For simplicity, these plans are Compounded annually using the equation.

A = P (1+r %) t

A = Amount to be repaid

P = Total Researched Cash Price of chosen items

r% = rate to be changed to a decimal = r/100

t = time in years

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 PRESENTATION OF DATA

Total cost of 2.5% processing

$ 20, 298.00 20, 805.45

Amt to be repaid % Cost Monthly Repayment period in

Flexi-Complete $30, 787.90 47.97% $1, 282.82 24

Flexi-Pass $23, 923.67 14.98% $1, 594.91 15

Flexi-Home $56 ,164.31 169.94% $936.07 60

Flexi Easy $25, 795.64 23.98% $1, 433.09 18

$60,000.00

$50,000.00

$40,000.00

$30,000.00

$20,000.00

$10,000.00

$0.00
Amt. to be repaid % increase Monthly Installments Repayment period in
months

Flexi-Complete Flexi-Pass Flexi-Home Flexi-Easy

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 Calculations

Cost of TV VAT inclusive = $5, 299.00

Cost of Sofa set VAT inclusive = $14, 999.00

Total before processing fees = $20, 298.00

Total after processing fees = $20, 805.45

FLEXI-COMPLETE interest rate = 23.99%

FLEXI-COMPLETE repayment period = 24 months

FLEXI-COMPLETE repayment value = $ 20, 805.45 (1+0.2399 *2) = $30,787.90

FLEXI-COMPLETE percentage increase = (30, 787.90 - 20, 805.45) / (20, 805.45) * 100 =

47.97%

FLEXI-COMPLETE monthly instalments = $ 30, 787.90 / 24 = $ 1, 282.82

FLEXI-PASS interest rate = 11.99%

FLEXI-PASS repayment period = 15 months

FLEXI-PASS repayment value = $ 20, 805.45 (1+0.1199*1.25) = $23,,923.67

FLEXI-PASS percentage increase = (23, 923.67 - 20, 805.45) / (20, 805.45) * 100 = 14.98%

FLEXI-PASS monthly instalments = $ 23, 923.67 / 15 = $ 1, 594.91

FLEXI-HOME interest rate = 33.99%

FLEXI-HOME repayment period = 60 months

FLEXI-HOME repayment value = $ 20, 805.45 (1+0.3399*5) = $56 ,164.31

FLEXI-HOME percentage increase = (56, 164.31 - 20, 805.45) / (20, 805.45) * 100 =

169.94%

FLEXI-HOME monthly instalments = 56, 164.31 / 60 = $ 936.07

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FLEXI-EASY interest rate = 15.99%

FLEXI-EASY repayment period = 18 months

FLEXI-EASY repayment value = $ 20, 805.45 (1+0.1599*1.5) = $25, 795.64

FLEXI-EASY percentage increase = (25, 795.64 - 20, 805.45) / (20, 805.45) * 100 = 23.98%

FLEXI-EASY monthly instalment = $ 25, 795.64 / 18 = $ 1, 433.09

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 ANALYSIS OF DATA

Amt to be repaid % Cost Monthly Repayment period in

Flexi-Complete $30, 787.90 47.97% 1, 282.82 24

Flexi-Pass $23, 923.67 14.98% $1, 594.91 15

Flexi-Home $56 ,164.31 169.94% $ 936.07 60

Flexi Easy $25, 795.64 23.98% $ 1, 433.09 18

From the above results, the highest payback value comes from the FLEXI-HOME

at $56,16.31 and the lowest from the FLEXI-PASS package. The FLEXI - HOME

scheme has the highest percentage of the original price, 169.9%, and the FLEXI-

PASS package brings the lowest increase of 14.98%. As expected, plans with shorter

terms have higher monthly payments. FLEXI-PASS has the highest monthly payment of

and FLEXI-HOME has the lowest monthly payments.

The results show that the highest percentage increase was the flexible home with the

longest repayment period (60 months) and the highest repayment amount, with a monthly

payment of

$56,16.31. Flexi-pass also had the lowest repayment period of 15 months, a quarter of the

flexi-home periods, but the highest monthly payment of $1,59.91. The

Flexi-easy had the third highest percentage increase of the four contracts and the second

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highest repayment amount over 18 months, with monthly payments of $1,433.09. In second

place was Flexi complete with the second highest repayment amount, second percentage

increase, repayment period and the second lowest monthly instalment of 1, 282.82

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 DISCUSSION OF FINDINGS

The plans reveal that they are strategically designed to maximise returns taking into account

the financial situation of the average consumer. However, if the premiums are low, the

must account for the period and cost increase percentages due to the specific plan.

One may be tempted to enter into such a contract without considering the great difference

between goods and ordinary or cash rice.

The plans with the shortest repayment period have the lowest repayment amount and the

lowest percent increase from the original price, but still have the highest monthly payments .

In contrast, the plans with the longer repayment period has the highest repayment amount

and the percentage increase of the original price, although instalments are meant to support

one's economic status, contracts have proven to be more expensive in the long run than

buying things with cash. Thus, it is critical to research the percentage of initial price

increase and the amount of monthly instalments before entering into such contracts if they

are in a tight and routine budget.

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 CONCLUSION

Finally, based on my findings, the FLEXI-EASY plan would be appropriate for my

requirements.

This strategy did not result in the lowest repayment value, percent rise, or monthly

instalment. Nonetheless, based on an 18-month payment period at a monthly cost of

$1,433.09, instalment, I believe this is a reasonable balance without having to pay a

significant raise. Finally, based on my findings, the FLEXI-EASY plan would be appropriate

for my requirements. This strategy did not result in the lowest repayment value, percent rise,

or monthly instalment. Nonetheless, based on an 18-month payment term and a monthly

instalment of $1,433.09, I believe this is a reasonable balance without requiring a significant

increase.

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