Question

Anthony purchased a bedroom set for $3,860 using a six-month deferred payment plan with an interest rate of 27.29%. What is the balance after the deferment period if payments of $172 are made each month?

a) $2,828.00

b) $4,417.57

c) $3,385.57

d) $3,860.00

Answer 1

I'm not exactly sure how the deferred payment plan is set up, but I'm assuming that you don't make any payments for those 6 months and interest is being accrued (ie added on)

Also, I'm assuming it's being compounded monthly

If that's the case, then...

A = P(1 + r/n)^(nt)

in this case, P = 3860, r = 0.2729, n = 12 and t = 6/12 (t is in years)

A = 3860*(1+0.2729/12)^(12*6/12)

A = ???

Tell me what you get

Answer 2

I got 4417.57

Answer 3

me too, congrats

Answer 4

So this is the amount that she must pay off after the 6 month deferred period is up (ie this is the balance after 6 months)

Answer 5

where no payments were made during that 6 month deferred period

Answer 6

Yep! Thank you for your help

Answer 7

yw