1. The problem: Understand how hire purchase works. 2. Hire purchase is a method of buying goods through installment payments over time while using the goods immediately. 3. The formula to calculate the total amount paid is: $$\text{Total Payment} = \text{Deposit} + (\text{Monthly Payment} \times \text{Number of Months})$$ 4. Important rules: - You pay an initial deposit. - You pay fixed monthly installments. - You only own the item after the last payment. 5. Example: If the deposit is 200, monthly payment is 50, and the term is 12 months, then: $$\text{Total Payment} = 200 + (50 \times 12)$$ $$= 200 + 600 = 800$$ 6. This means you pay 800 in total to own the item. 7. Hire purchase allows you to spread the cost but usually includes interest, making the total higher than the cash price.