Hire purchase question

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Can't seem to get the answer for part (b) of this question... brain blocked 

A tv set, which normally costs $880, can be bought through hire purchase with a $200 deposit and a payment of $30 a month for 30 months.
Calculate:
(a) the amount of interest being charged

Hire purchase cost = 200 + 30*30 = $1100
Interest charged = 1100 - 880 = $220

(b) the flat rate of interest

(c) the effective rate of interest
$220 is the interest; $880 is the principal.
Interest = 220 / 880 = 25%

[|ll|lll|]

Bump?

[ashmi]

Can't seem to get the answer for part (b) of this question... brain blocked 

A tv set, which normally costs $880, can be bought through hire purchase with a $200 deposit and a payment of $30 a month for 30 months.
Calculate:
(a) the amount of interest being charged

Hire purchase cost = 200 + 30*30 = $1100
Interest charged = 1100 - 880 = $220

(b) the flat rate of interest

(c) the effective rate of interest
$220 is the interest; $880 is the principal.
Interest = 220 / 880 = 25%

Hey!

So for a flat rate of interest, this can be calculated using the following:

Where 'rf' is your flat rate of interest per annum, 'I' is the total interest paid, 'P' is the principle that is owed after the deposit has been taken away and 't' in years.

Have a go first using the above and if you get stuck, look at the spoiler below:

Spoiler

In part a, you were able to calculate there was an interest of $220. If we convert 30 months into years by doing 30/12, we get 2.5 years. The last step needed to be done is calculating the new 'P' which is $880 (your original amount) - $200 (the deposit you put in)

Subbing these values in will give you the following:

rf = 12.9%

Hope that helps!