Question

Christopher took out a 4 year loan for $1150 at a sports-equipment store to be paid back with monthly payments at a 42% APR, compounded monthly. If the loan offers no payments for the first 9 months, how much will Christopher owe when he begins making payments?

O A. $1150.00

O B. $1199.24

O C. $1359.98

O D. $1186.74

Answer 1

Answer: $1186.74

Explanation:

Answer 2

The correct option is D.

Explanation:

It is given that Christopher took out a 4 year loan for $1150 at a sports-equipment store to be paid back with monthly payments at a 4.2% APR, compounded monthly.

The formula for amount after compound interest is

`A=P(1+(r)/(n))^(t)`

Where, P is principal, r is rate of interest, n is number of time interest compounded in a period, number of periods.

According to the given information,

P=1150

r=0.042

n=12

t=9

Put these values in the above formula,

`A=1150(1+(0.042)/(12))^(9)`

`A=1186.73631355`

`A\approx 1186.74`

Christopher owe $1186.74 when he begins making payments. Therefore the correct option is D.