Question

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?

Answer 1

950+(950×0.05)=997.5
Interest over one year = $997.5 (12.5)/100
Interest over one year = $997.5 (12.5)/100
Interest over one year = $124.6875 which when rounded to two decimals = $124.69

Answer 2

The interest is $10.39.

Explanation:

Your original purchase price was $950.00 plus 5% sales tax.

Purchase price =
`950+0.05*950=997.50` dollars

Monthly Rate =
`12.5/12/100=0.010417`

So, interest on the purchase price =
`997.50*0.010417`

= $10.39

Hence, the interest is $10.39.