Question

Milo is purchasing a new refrigerator for $3600 using an in-store offer. The store is offering a 90 days same-as-cash loan. This means that at the end of the 90 days, if Milo has paid off the cost of the refrigerator, he owes no added interest charge, but if he does not pay off the entire cost of the refrigerator, he owes simple interest on the original purchase amount, calculated over the entire 90 days. If the annual interest rate is 23.99% how much would Milo owe on the 91st day if he made no payments during the first 90

days? Round your answer to the nearest cent, if necessary.

Answer 1

Explanation:

If Milo does not make any payments during the first 90 days, he will owe simple interest on the original purchase amount of $3600 at an annual interest rate of 23.99% for the entire 90 days.

To calculate the interest owed, we can use the formula:

Interest = Principal × Rate × Time

Where:

Principal = $3600 (original purchase amount)

Rate = 23.99% (annual interest rate)

Time = 90/365 (since the interest is calculated for 90 days out of 365 days in a year)

Let's calculate the interest:

Interest = $3600 × 0.2399 × (90/365)

Simplifying the equation, we get:

Interest = $3600 × 0.2399 × 0.2466

Now, let's calculate the interest amount:

Interest = $214.92

Therefore, if Milo does not make any payments during the first 90 days, he would owe $214.92 on the 91st day, rounded to the nearest cent.