Question

Adriano purchased a living room set for $4308 using 18-month deferred payment plan with an interest rate of 16.59%. What is the balance after the deferment period if no payment are made

Answer 1

The interest rate is 16.59% per year compounded yearly. To be consistent, let's convert the unit of time to year.

Time = 18 months (1 yr/12 months) = 1.5 yrs

Then, we use this formula:

F = P(1+i)^n
F = 4308(1+0.1659)^1.5
F = $5,423.35

The balance would be $5,423.35.