Sakura purchased ski equipment for $1,248 using a six-month deferred payment plan. The interest rate after the introductory period is 23.79%. A down payment of $175 is required as well as a minimum monthly payment of $95. What is the balance at the beginning of the seventh month if only the minimum payment is made during the introductory period?
$1,207.13

$659.00

$1,112.13

$637.13

Question

Sakura purchased ski equipment for $1,248 using a six-month deferred payment plan. The interest rate after the introductory period is 23.79%. A down payment of $175 is required as well as a minimum monthly payment of $95. What is the balance at the beginning of the seventh month if only the minimum payment is made during the introductory period?
$1,207.13

 $659.00

 $1,112.13

 $637.13

tkhunny · Answer

So, there is NO interest in the 1st 6 months?  Isn't it then just a subtraction problem?

anonymous · Answer

I'm not sure , i'm so confused.

tkhunny · Answer

Let's see: 1248 - 175 - 5*95 = 598

Okay, then maybe there is some sales tax or some lower interest in the first six months.  How wure are you that you presented ALL of the problem statement?

anonymous · Answer

It might be , but I can't think what it will be.

anonymous · Answer

Elliot is graduating from college in six months, but he will need a loan in the amount of $4,850 for his last semester. He may either receive an unsubsidized Stafford Loan with an interest rate of 6.8%, compounded monthly, or his parents may get a PLUS Loan with an interest rate of 7.8%, compounded monthly. The Stafford Loan has a grace period of six months from the time of graduation. Which loan will have a higher balance and by how much at the time of repayment?

 The PLUS Loan has a higher balance by $51.84.

 The Stafford Loan has a higher balance by $327.01.

 The Stafford Loan has a higher balance by $148.03.

 The PLUS Loan has a higher balance by $259.64.

tkhunny · Answer

If we charge 26.98% during the deferral period, which apparently is not really a deferral period, we get: $637.13

If we charge 31.014% during the deferral period, which apparently is not really a deferral period, we get: $659.00

Yikes!  I'm not liking this deferral period.

anonymous · Answer

I don't even know anything about the deferral period.

tkhunny · Answer

That does make it tough to answer.  It's hard to write a good question.  This appears to be a failure.

anonymous · Answer

If you had to guess , what will you say ?

tkhunny · Answer

If I were on an exam and had to respond, I would suggest approximately what I have shown above.

1) An interest rate of 0% during the deferral period makes no sense.

2) An interest rate related to the post-deferral interest rate almost reproduces the least value.

3) An interest rate far in excess of the post-deferral period matches the second lowest value.  This suggests the interest rate for the other two is at least usury, if not loan sharking.

We need a better question.