hire purchase system

This query is : Resolved 

24 July 2009 what is annuity factor?
multiplying with just annual instalment one can get the full cash price...what is logic?

04 August 2009 Assumption: Knowledge of discounting

Instalments are including the interest component. By discounting the annual instalments, we can get the current cash price or the NPV of all the instalments payable. It is the normal discounting, where annuity is the sum of discount factor for all the years of the loan.



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