Question

Susannah purchased a lawn mower for $1,250 using a six-month deferred payment plan. The interest rate after the introductory period is 25.99%. No down payment is required, but there is a minimum monthly payment of $30. What is the balance at the beginning of the seventh month if only the minimum payment is made each month during the introductory period?

Answer 1

$1,070.00

$1,250.00

$1,241.49

$1,421.49

Answer 2

$1,070 as during the introductory period there is no interest charged and only the minimum monthly payment of $30 was paid for six months ($30 x 6months= $180) ($1250-$180=$1070) hence beginning balance would be $1070