Hire Purchase
Arrangement to use asset while paying for it in installments.
Formula
Total Cost = Deposit + (Monthly Instalment × Number of Payments)
Real World
A small building firm buys a JCB excavator on hire purchase, paying a 10% deposit then monthly instalments over three years, using the machine on site from day one.
Exam Focus
Note ownership only transfers at the final payment — a common exam trap when discussing asset ownership timing.
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