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lswimstar
 3 years ago
Sharon purchased a sprinkler system for $1,950 using a sixmonth deferred payment plan. The interest rate after the introductory period is 23.99%. No down payment is required, but there is a minimum monthly payment of $25. What is the balance at the beginning of the seventh month if only the minimum payment is made each month during the introductory period?
a.1950.00
b.2045.91
c.2195.91
(these answers are rounded to the fourth decimal place)
I was given this formula, but I can't figure it out: M=P(i(1+i)^nt / (1+i)^nt1
lswimstar
 3 years ago
Sharon purchased a sprinkler system for $1,950 using a sixmonth deferred payment plan. The interest rate after the introductory period is 23.99%. No down payment is required, but there is a minimum monthly payment of $25. What is the balance at the beginning of the seventh month if only the minimum payment is made each month during the introductory period? a.1950.00 b.2045.91 c.2195.91 (these answers are rounded to the fourth decimal place) I was given this formula, but I can't figure it out: M=P(i(1+i)^nt / (1+i)^nt1

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lswimstar
 3 years ago
Best ResponseYou've already chosen the best response.0The correct answer is b, but I guessed. I would like to know how to get that answer.

mathstudent55
 3 years ago
Best ResponseYou've already chosen the best response.0Start with 1950 After 1st month: 1950 25 = 1925 After 2nd month: 1925  25 = 1900 After 3rd month: 1900  25 = 1875 After 4th month: 1875  25 = 1850 After 5th month: 1850  25 = 1825 After 6th month: 1825  25 = 1800 Future Value = P(1 + i)^n = $1950(1 + 23.99/100/12)^6 = $2195.91 Interest = Future Value  Present value = 2195.91  1950 = $245.91 $1800 + $245.91 = $2045.91

Directrix
 3 years ago
Best ResponseYou've already chosen the best response.0@Iswimstar > See discussion at http://openstudy.com/study#/updates/510dc843e4b0d9aa3c47828d
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