Question

Janet is going to purchase a new bedroom set from Ashley Furniture. She finds a set that she loves and will cost her $5,550 for all items. She is

choosing to do an 8-month deferment payment. How much interest will she have gain onto her cost is she is charged an 22% rate compounded
monthly?

Answer 1

Janet will have gained approximately $6,503.40 in interest on her cost.

Step-by-step explanation:

To find the amount of interest Janet will have gained onto her cost, we can use the formula for compound interest:

A = P(1 + r/n)^(nt)

Where:

• A is the amount after time t, including interest
• P is the principal amount (the initial cost)
• r is the annual interest rate (22% or 0.22)
• n is the number of times that interest is compounded per year (in this case, monthly, so n = 12)
• t is the time in years (8 months or t = 8/12 = 2/3)

Plugging in the values, we get:

A = 5550(1 + 0.22/12)^(12 * (2/3))

A = 5550(1.0183)^(8)

A ≈ 5550(1.1720)

A ≈ 6503.40

Therefore, the interest Janet will have gained onto her cost is approximately $6,503.40.