Question

Mr. White purchased a new TV on a deferred payment plan. The purchase price was $2,000. He needs to pay $120 per month for 12 months and the remaining balance amount in the following month.

After Mr. White makes the 12 monthly payments, he will have to make a final payment of . If Mr. White defaults on his payments, he will have to .

Answer 1

After Mr. White makes the 12 monthly payments, he will have to make a final payment of $560.

If Mr. White defaults on his payments, he will have to pay additional interest on late fees and penalties, face credit and legal problems, collectors, etc...

Explanation:

First, we are going to find how much he has payed after 12 months of monthly payments. We know that Mr. White needs to pay $120 per month for 12 month, so to find the total amount he has payed, we just need to multiply the monthly payment by the number of months:

Total = 12 x $120

Total = $1,440

Now, we know that the purchase price of the TV is $2,000. Since he has already paid $1,400, his final payment can be calculates by subtracting $1,440 from the purchase price of the TV;

Final payment = $2,000 - $1,440

Final payment = $560

We can conclude that after Mr. White makes the 12 monthly payments, he will have to make a final payment of $560.

Now, If Mr. White defaults on his payments, he will have to pay additional interest on late fees and penalties, face credit and legal problems, collectors, etc...