Let's break down the given problem step by step.
1. Cash Price of the Motorcycle:
The cash price of the motorcycle is Sh 60,000.
2. Hire Purchase Price:
The hire purchase price is 20% more than the cash price. To find the hire purchase price, we calculate:
[tex]\[
\text{Hire purchase price} = \text{Cash price} + 20\% \text{ of Cash price}
\][/tex]
[tex]\[
\text{Hire purchase price} = 60,000 + (0.20 \times 60,000)
\][/tex]
[tex]\[
\text{Hire purchase price} = 60,000 + 12,000
\][/tex]
[tex]\[
\text{Hire purchase price} = 72,000
\][/tex]
3. Monthly Installment:
Fred pays the balance in eight equal monthly installments of Sh 110,000 each. We calculate the total amount paid through these installments:
[tex]\[
\text{Total installment payment} = \text{Monthly installment} \times \text{Number of installments}
\][/tex]
[tex]\[
\text{Total installment payment} = 110,000 \times 8
\][/tex]
[tex]\[
\text{Total installment payment} = 880,000
\][/tex]
4. Deposit Paid:
The deposit paid is the difference between the hire purchase price and the total amount paid through installments. We calculate:
[tex]\[
\text{Deposit paid} = \text{Hire purchase price} - \text{Total installment payment}
\][/tex]
[tex]\[
\text{Deposit paid} = 72,000 - 880,000
\][/tex]
[tex]\[
\text{Deposit paid} = -808,000
\][/tex]
Therefore, Fred paid Sh -808,000 as a deposit.
