Your original purchase price was $825.00 plus 7% sales tax. You enter into an agreement where the interest (12.5% APR) is waived for the first 12 months provided you make the required monthly payments; otherwise the interest is accrued from the date of purchase. You miss the first payment due date. The late fee is $35.00. How much is the interest?
• $103.13
• $110.34
• $8.59
• $9.20 my answer???
How much is the interest if you do not pay the second month?
• $9.05
• $9.66 my answer???
• $121.53
• $143.70
those two are correct my friend
Second month is 9.66
Well, well, well. Looks like someone's been slacking on their payments, huh? Alright, let's crunch some numbers and see how much trouble you're in.
For the first question, we need to calculate the interest if you miss the first payment. The interest rate is 12.5% APR, which means it's a yearly rate. Since the interest is waived for the first 12 months, that means you won't owe any interest within that grace period. So, the interest would be zero. Zilch. Nada. No interest for you.
As for the second question, if you miss the second payment, the interest will start accruing from the date of purchase. The interest rate is still 12.5% APR, but since it's only been one month since the purchase, the interest will be calculated for that period. Now, I don't want to be the bearer of bad news, but I'm afraid you chose the incorrect answer this time. The correct answer would be $9.05.
Remember, my friend, always stay on top of your payments. Otherwise, the interest will start piling up faster than a clown car full of clowns. And nobody wants that. Trust me.
To calculate the interest, we first need to find the original purchase price plus sales tax.
Original Purchase Price: $825.00
Sales Tax (7%): $825.00 x 0.07 = $57.75
Total Amount: $825.00 + $57.75 = $882.75
Now, let's calculate the interest for missing the first payment.
Late Fee: $35.00
Interest Rate (APR): 12.5% or 0.125 (decimal)
Interest for First Month: $882.75 x 0.125 / 12 = $9.22
Therefore, the interest for missing the first payment is $9.22.
Now, let's calculate the interest for missing the second month.
Interest for Second Month: $882.75 x 0.125 / 12 = $9.22
Therefore, the interest for missing the second month is also $9.22.
So, the correct answer for the first question is $9.22 (rounded to the nearest cent), not $9.
The correct answer for the second question is also $9.22 (rounded to the nearest cent), not $9.66.
To answer these questions, we need to calculate the interest accrued for each scenario.
Let's start with the first question: "How much is the interest if you miss the first payment due date?"
To calculate this, we need to determine the principal amount (original purchase price + sales tax) and then compute the interest for the first 12 months, considering a 12.5% annual percentage rate (APR).
1. Calculate the principal amount:
Principal = Original purchase price + Sales tax = $825.00 + 7% * $825.00
Sales tax = 7% * $825.00 = $57.75
Principal = $825.00 + $57.75 = $882.75
2. Calculate the interest for the first 12 months:
Interest = Principal * (Annual interest rate / 12) * Number of months
Annual interest rate = 12.5%
Number of months = 12
Interest = $882.75 * (12.5% / 12) * 12
Interest = $882.75 * 0.010416667 * 12
Interest ≈ $115.52
However, you mentioned that there is a late fee of $35.00. So, we need to subtract the late fee from the interest:
Interest - Late fee = $115.52 - $35.00 = $80.52
Hence, the correct option for the first question is none of the given choices.
Now let's move on to the second question: "How much is the interest if you do not pay the second month?"
Since the first month's payment is missed, there is already interest accrued from the date of purchase. So, we need to calculate the interest for the remaining 11 months.
1. Calculate the principal amount:
Principal = Original purchase price + Sales tax = $825.00 + 7% * $825.00
Sales tax = 7% * $825.00 = $57.75
Principal = $825.00 + $57.75 = $882.75
2. Calculate the interest for the remaining 11 months:
Interest = Principal * (Annual interest rate / 12) * Number of months
Annual interest rate = 12.5%
Number of months = 11
Interest = $882.75 * (12.5% / 12) * 11
Interest = $882.75 * 0.010416667 * 11
Interest ≈ $101.36
Therefore, the correct option for the second question is none of the given choices.