Question

Sonia purchased a pool for $2,150 using a six-month deferred payment plan. The interest rate after the introductory period is 27.99%. No down payment is required, but there is a minimum monthly payment of $35. What is the balance at the beginning of the seventh month if only the minimum payment is made each month during the introductory period? (4 points)

Select one:
a. $2,468.99
b. $1,940.00
c. $2,150.00
d. $2,258.99

Answer 1

The correct answer is D. $2,258.99

Answer 2

Option D is correct.

Explanation:

Sonia purchased a pool for $2,150 using a six-month deferred payment plan.

No down payment is required, but there is a minimum monthly payment of $35.

So, payments made in 6 months =
`35*6` = $210

Now, compound interest is found as:

`A=p(1+(r)/(n))^(nt)`

Here p = 2150

r = 27.99% or 0.2799

n = 12

t = 1/2 = 0.5

Substituting the values in formula we get;

`A=2150(1+(0.2799)/(12))^(12*0.5)`

=>
`A=2150(1.023325)^(6)`

A = $2468.99

Balance =
`2468.99-210` = $2258.99

Therefore, the answer is option D.