Question

You decide to buy a refurbished computer for $550.00 plus 6% sales tax. BB Electronics allow you to take out a no-interest loan for 12 months, and after that the interest rate is a 13.25% APR. You must make payments of $25/month, and if you miss one payment you are assessed a late fee of $29.00 plus 13.25% APR interest beginning from the date of purchase.

You missed the second payment. What is the amount of interest of the bill you will receive?

Answer 1

The interest on the bill will be calculated as follows:

Amount of Loan = $550

Sales Tax = 6% of $550 = $33

Total Loan = $550 + $33 = $583

Interest = 13.25% APR x $583 = $77.13

Late fee = $29

Total Interest = $77.13 + $29 = $106.13