Question

Ben made some home improvements for $9,375 using a six-month deferred payment plan with an interest rate of 19.42%. What is the balance after the deferment period if no payments are made?

Answer 1

I think he owes 1/2 a year's interest on top of the original loan

Answer 2

well the choices are these $10,322.95

$9,375.00

$11,195.63

$10,244.95

Answer 3

Do you know how to figure the interest for 1/2 a year at a rate of 19.42% ?

Answer 4

no im completely lost in this class

Answer 5

Did they tell you any formulas ?
Does this one ring any bells?
http://math.about.com/od/businessmath/ss/Interest.htm

Answer 6

oh, yes but how would i set this problem up

Answer 7

Or, if compounded monthly,
http://qrc.depaul.edu/StudyGuide2009/Notes/Savings%20Accounts/Compound%20Interest.htm

Answer 8

I just checked, and none of the answers match "simple interest"

Answer 9

so it looks like a compounded monthly problem

Answer 10

oh ok thanks

Answer 11

Have you seen that formula before?

Answer 12

Can you write it down, because people use different symbols for the same formula

Answer 13

um ok is this how you set it up A=9375(1+19.42%/12)^12

Answer 14

before you put in numbers,what are the letters you use?

Answer 15

a=p(1+r/n)nt

Answer 16

OK except you mean
a=p(1+r/n)^(nt)

the ^ means raise to the power (otherwise you might think multiply, which is not right)

You are on the right track. First, how many months is this loan ? Read the problem carefully.

Answer 17

oh six months

Answer 18

that means t = 1/2 of a year
n is the number of times compounded in a year. n is 12

the number nt should be 6: 12*1/2 = 6

generally I just think : how many months is the loan

so we know nt = 6

next, the rate is ALWAYS CHANGED INTO A DECIMAL
% means divide by 100

Answer 19

19.42% means 19.42 per cent (and cent is latin for hundred. think dollar and cents or century)
19.42% = 19.42/100

Answer 20

0.1942

Answer 21

ok, now what do you have when you put in the numbers?

Answer 22

A=9375(1+0.1942%/6)^6

Answer 23

almost, by n is 12. This loan is going to be paid monthly, so you divide the interest rate (which is for a whole year) by 12. But the loan is for 6 months.

also, once you change 19.42% to a decimal it is not a percent anymore. (no % any more)

can you fix your formula?

Answer 24

im lost.....is not A=9375(1+0.1942%/12)^6 if not can you set it up?

Answer 25

that looks good except for the %
A=9375(1+0.1942/12)^6

Answer 26

oh ok sorry =D

Answer 27

10322?

Answer 28

now copy and paste into google
9375(1+0.1942/12)^6=
or get your calculator

Answer 29

I got 10322.9466
round to the nearest penny. That means look at the decimal to the right of 94 and check if it is 5 or more. if it is, round up to 95 cents (otherwise, just make it 94 cents)

in this case, we get 10322.95