Question

HELP PLEASE!! Hannah purchased a jet ski for $1,674 using a 12-month deferment plan. The interest rate is 23.37%. A down payment of $375 is required as well as a minimum monthly payment of $53. What is the balance at the beginning of the 13th month if only the minimum payment is made during the introductory period?

Answer 1

lets first determine how much was financed.

she had to pay a down payment initially = so tell me how much was financed

Answer 2

375?

Answer 3

yes that was her down payment amount. so basically subtract that from the purchase price and that will tell us the amount financed

Answer 4

$1299

Answer 5

yes,

Answer 6

now lets determine the interest-
int rate X financed = amount of interest
then add that interest to our 1299 amount

Answer 7

I got 1386.38

Answer 8

try that again,
.2375 X 1299 = 308.51

1299 + 308.51 = ???

Answer 9

oops, i should have done .2337

Answer 10

I got 303.58

Answer 11

right, now add that to 1299

Answer 12

1602.58?

Answer 13

correct.

she paid 53 times 12 months... (53*12=??)

Answer 14

636

Answer 15

perfect, now subtract that from the 1602.58 and you will know what is the balance as of 13th month beginning

Answer 16

But thats 966.58 and that isnt a choice.

Answer 17

is 1019.58 a choice?

Answer 18

if so - it is because in her 1st month she did not pay the 53 just her downpayment; so we should had done 53*11 and subtracted that....

Answer 19

no. the choices are: $1,001.30

$1,098.96

$1,584.30

$1,637.30

Answer 20

not getting any of those, I am assuming simple interest - are u on compound interest?

also is the interest given - annual (assumption unless otherwise told)

Answer 21

you should use compound interest, compounded monthly

I am guessing
12-month deferment plan
means you don't pay the monthly fee for 12 months.

Answer 22

Yes I'm on compound interest.

Answer 23

oh :) makes a diffference. but the problem is not implied by such

Answer 24

How would I set it up?

Answer 25

P (1+i/n)^nt

n is 12
t is 1 year
i is 0.2337

Answer 26

ok and i got 2109.96, what do i do from here?

Answer 27

Oh wait I got 1098.96. Thanks you guys.