Question

Edgar purchased a living room set for $4,258 using a 12-month deferred payment plan. The interest rate after the introductory period is 18.70%. A down payment of $325 is required as well as a minimum monthly payment of $117. What is the balance after the introductory period if only the minimum payment is made until then?

$3,397.16

$4,617.90

$3,330.90

$4,734.90

Answer 1

@Mertsj

Answer 2

4258-325-117(12)

Answer 3

2529?

Answer 4

yes

Answer 5

thats not an option though. because i came up with the same number but didnt know what to do

Answer 6

I don't know. How do the examples in your book show to handle this type of problem. Is there an interest charge during the deferred payment period?

Answer 7

it says its 18.70 but during the deferred period you dont pay interest. it all is accumulated and applied directly after the period.

Answer 8

Well there is your answer then. You must have a formula to calculate the interest charges for the year based on the monthly payment and the down payment. Add that to the answer you got and that should be the answer.

Answer 9

Have you tried using the interest formula?

Answer 10

yeah but i always get the wrong answer

Answer 11

\[I=Prt\] \[A=P(1+rt)\] Is for simple interest.
Compound interest is: \[A=P(1+\frac{ r }{ n })^{nt}\]
Make sure you're using the formula correctly.

Answer 12

which one?

Answer 13

I would say simple interest, but just so you know:

I=Intrest earned
P=principal
r=annual interest rate
t= time in years
n=number of times compounded per year
A= total amount after time t

Answer 14

4734.90
\[A=3933(1+\frac{.187}{12})^{12}\]

Answer 15

Oh, compound interest then.