Hire Purchase
Arrangement to use asset while paying for it in installments.
Formula
Total HP Cost = Deposit + (Monthly Payment × Number of Months)
Real World
A small courier firm might use hire purchase to acquire a fleet of Transit vans from Ford, paying a deposit then monthly instalments over 36 months, allowing them to operate without a large upfront capital outlay.
Exam Focus
Compare total HP cost to outright purchase price to show the premium paid — examiners reward quantitative reasoning in 'justify' questions.
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