Robson » Little Red Book » Hire Purchase Charges

Chapter 3 - Question 11

Given the cash price of an item together with the percentage rate required, calculate the HP charges for a given repayment.

Solution 1

I had no idea how hire purchasing works, so I had a look round the web for some information. As far as I can tell a total price is agreed upon and then the buyer pays equal amounts every month until they reach that amount. They usually pay a deposit, but the question doesn't mention that so I wont include that part of the deal.

I'm not certain that's how it works, but I can always update my answer if I discover it works differently.

<?
   // a random cash price of an item in pounds
   $cash_price = mt_rand(5, 20);
   // a random percentage rate
   $percentage_rate = mt_rand(5, 50);
   // a random number of repayment periods
   $repayments = mt_rand(2, 10);
   
   // the total amount to pay is the cash price plus the percentage
   $total = $cash_price + ($cash_price * ($percentage_rate / 100));
   
   // the amount to pay each month is the total amount
   // divided by the number of repayments
   $repayment = $total / $repayments;
   
   // output the original values
   echo   . number_format($cash_price, 2) . '<br/>'
        . 'Percentage Rate: ' . $percentage_rate . '%<br/>'
        . 'Repayments: ' . $repayments;
       
   // output the total amount to be paid    
   echo . number_format($repayment, 2) . '</b>';
?>

Which produces:

Cash Price: 20.00
Percentage Rate: 36%
Repayments: 4

Monthly Amount: 6.80

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