Question

Sarah purchased a swing set for $1,450 using a six-month deferred payment plan. The interest rate after the introductory period is 19.99%. No down payment is required, but there is a minimum monthly payment of $20. What is the balance at the beginning of the seventh month if only the minimum payment is made each month during the introductory period

Answer 1

$1,330

Step-by-step explanation:

Sarah makes a minimum monthly payment of $20

If she is required to make this payment for a period of six months, then the total payment is

= $20×6

= $120

Since Sarah purchased the swing set for $1,450, then the balance at the beginning of the seventh month can be calculated as follows

= $1,450-$120

= $1,330

Hence the balance at the beginning of the seventh month is $1,330