Question

Elmer took out an 18-month loan for $1400 at an appliance store to be paid

back with monthly payments at a 22.8% APR, compounded monthly. If the
loan offers no payments for the first 9 months, which of these groups of
values plugged into the TVM Solver of a graphing calculator will give him the
correct answer for the amount of the monthly payment over the last 9 months
of the loan?
O
A. N=0.75; 1% = 22.8; PV=-1400; PMT=; FV=0; P/Y=12; C/Y=12;
PMT:END
O
B. N=9; 1% = 22.8; PV=-1400; PMT=; FV=0; P/Y=12; C/Y=12;
PMT:END
O
C. N=0.75; 1% = 22.8; PV=-1658.42; PMT=; FV=0; P/Y=12; C/Y=12;
PMT:END
O
D. N=9; 1% = 22.8; PV=-1658.42; PMT=; FV=0; P/Y=12; C/Y=12;
PMT:END

Answer 1

N= 9, PV= 1658

Explanation:

Answer 2

D) N=9; 1% = 22.8; PV=-1658.42; PMT=; FV=0; P/Y=12; C/Y=12; PMT:END

Explanation:

Since the loan offers no payments during the first 9 months, then N = 9 months instead of 18 months.

The interest rate remains the same = 22.8%

The present value of the loan = the future value of the loan's principal on the ninth month = -$1,400 x [1 + (22.8% x 9/12)]⁹ = -$1,400 x 1.184 = -$1658.42