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WAEC 2019 · Paper 2 · Q10

A man bought a house at $350,000.00. He paid 20%20\% of the cost from his own resources and the rest with a loan he took from the bank at 7%7\% simple interest per annum for 8 years. Calculate the:

  1. (a)

    total cost of the house to the man;

  2. (b)

    percentage increase in the cost of the house as a result of the loan;

  3. (c)

    percentage loss, correct to two decimal places, if after paying the loan, he renovates the house at a cost of $10,000.00 and then sells it for $460,000.00.

Worked solution (try it first)
  1. He paid 20%20\% himself, 0.2×350 000=70 0000.2 \times 350\,000 = 70\,000 dollars, and borrowed the other $280,000.

(a)

  1. Interest =280 000×7×8100= \frac{280\,000 \times 7 \times 8}{100}
    =156 800= 156\,800 dollars.
  2. Total cost =350 000+156 800=506 800= 350\,000 + 156\,800 = 506\,800, that is $506,800.

(b)

  1. The increase is the interest: 156 800350 000×100%=44.8%\frac{156\,800}{350\,000} \times 100\% = 44.8\%.

(c)

  1. Total spent =506 800+10 000=516 800= 506\,800 + 10\,000 = 516\,800 dollars.
  2. He sold for $460,000, a loss of 516 800−460 000=56 800516\,800 - 460\,000 = 56\,800 dollars.
  3. Percentage loss =56 800516 800×100%= \frac{56\,800}{516\,800} \times 100\%
    ≈10.99%\approx 10.99\%.

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