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The cash price of a cooker is Ksh 27 500. A customer opts to buy the cooker on hire purchase terms by paying a deposit of Ksh 17250. Determine the monthly rate of compound interest charged on the balance if the customer is required to repay by six equal monthly instalments of Ksh 2 100 each.

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p = cash price − deposit
27 500 − 17 250 = 10 250
A = PRn= installments
10 250R6 = 6 x 2 100
R6 = 12600
        10250
R = 1.035006 but R = 1 + r
R = 3.500% pm

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