Question

Your parents are purchasing a mobile home for $89,000. The sales tax is 4.2%, they make a $3,000 down payment, and they have an excellent credit score. How much is the interest at the end of the second month if their first month’s payment is $925.67?

Secured Unsecured

Credit APR (%) APR (%)

Excellent 4.75 5.50

Good 5.00 5.90

Average 5.85 6.75

Fair 6.40 7.25

Poor 7.50 8.40




$381.29



$352.95



$379.36



$300.15

Answer 1

The second option ,$ 352.95 is correct

Explanation:

The total cost of the home is the list price of $89,000 plus the sales tax of 4.2%

total cost=$89,000+($89,000*4.2%)=$92,738

loan amount=total cost-down payment=92738

-3000=$89738

APR is 4.75% since they have an excellent credit score

interest for first month=89738

*4.75%/12=$ 355.21

Principal payment in first month=total payment-interest=925.67- 355.21 =$570.46

principal left after first payment=$89,738

-$570.46=$89,167.54

second month interest payment= 89,167.54*4.75%/12=$ 352.95

The correct option is $ 352.95 which is the second option