Your original purchase price was $950.00 plus 5% 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 missed the first payment due date. The late fee is $35.00. How much is the interest?
To calculate the interest, we first need to calculate the amount of the purchase price including sales tax.
Original purchase price: $950.00
Sales tax (5%): $950.00 * 0.05 = $47.50
Total purchase price (including sales tax): $950.00 + $47.50 = $997.50
Next, we need to calculate the interest for the first 12 months with the waived interest rate.
Annual interest rate (APR): 12.5%
Monthly interest rate: 12.5% / 12 = 0.0104167
Number of months: 12
Interest for the first 12 months (waived): $997.50 * 0.0104167 * 12 = $124.69
Since you missed the first payment due date, the interest will be accrued from the date of purchase. Therefore, the interest is $124.69.
To calculate the interest in this scenario, we first need to determine the remaining balance after the first 12 months.
The original purchase price is $950.00, and the sales tax is 5%. So the total amount paid initially is:
$950.00 + (5/100) * $950.00 = $950.00 + $47.50 = $997.50
Now, let's calculate the interest accrued from the date of purchase, assuming a 12.5% APR (Annual Percentage Rate).
To find the monthly interest rate, we divide the APR by 12:
(12.5/100) * (1/12) = 0.0104166667 (approximately)
Next, we need to calculate the number of months for which the interest will be accrued. Since you missed the first payment due date, we'll consider the remaining months after the first 12 months, which is 11 months.
To calculate the interest accrued, we multiply the remaining balance by the monthly interest rate and the number of months:
$997.50 * 0.0104166667 * 11 = $115.63
Since you missed the first payment due date, you're also subject to a late fee of $35.00.
Therefore, the total interest including the late fee is:
$115.63 + $35.00 = $150.63
So, the correct answer is not among the given options.