anonymous
  • anonymous
Say I bought a TV for $289.99. I have a deferment plan. The minimum total purchase to get the plan is $149 and up. I picked the 6 month financing. My APR is 25.24%. And the minimum payment requirment is $25.... So this is my scenerio. can someone help me answer the following questions? @jim_thompson5910
Mathematics
  • Stacey Warren - Expert brainly.com
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SOLVED
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katieb
  • katieb
I got my questions answered at brainly.com in under 10 minutes. Go to brainly.com now for free help!
jim_thompson5910
  • jim_thompson5910
what questions are there?
anonymous
  • anonymous
yay! ok hold on a sec :)
jim_thompson5910
  • jim_thompson5910
ok

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anonymous
  • anonymous
1 Attachment
jim_thompson5910
  • jim_thompson5910
ok one sec
anonymous
  • anonymous
ok :))
jim_thompson5910
  • jim_thompson5910
I'm curious if you've learned the remaining balance of a loan formula at all?
anonymous
  • anonymous
ummm i think so one sec
jim_thompson5910
  • jim_thompson5910
ok
anonymous
  • anonymous
heres a part of the lessons i snipped out. im pretty sure this is it.
1 Attachment
jim_thompson5910
  • jim_thompson5910
are there any more formulas? I see one that will help with the monthly payment, but I don't see a remaining balance formula
anonymous
  • anonymous
let me double check
jim_thompson5910
  • jim_thompson5910
btw the formula at the very top will be useful for part 2 (since you don't pay down any of the debt, which makes calculating the balance much easier)
anonymous
  • anonymous
no there are no other formulas
anonymous
  • anonymous
here are snapshots of the lesson summary to maybe help?
jim_thompson5910
  • jim_thompson5910
sorry got distracted, one sec
jim_thompson5910
  • jim_thompson5910
well I have a remaining balance formula, but it's a bit complicated and I'm not sure you've learned it yet
anonymous
  • anonymous
well lets try it!
jim_thompson5910
  • jim_thompson5910
ok the formula is B = L*(1+r/n)^k - (P*n/r)*( (1+r/n)^k - 1 ) Where, B = Remaining balance at month k (payment is made on month k) L = Loan amount P = Payment per period r = Annual interest rate n = Compounding frequency k = Point in time where you want to find the remaining balance (time in months)
anonymous
  • anonymous
no i havnt learned that but i can see what they all mean
jim_thompson5910
  • jim_thompson5910
In this case, B = Unknown (we're solving for this) L = 289.99 P = 25 r = 25.24 n = 12 (we're compounding it monthly) k = 6 (you want to find the remaining balance at month 6)
jim_thompson5910
  • jim_thompson5910
Plug all these values in to get B = L*(1+r/n)^k - (P*n/r)*( (1+r/n)^k - 1 ) B = 289.99*(1+0.2524/12)^6 - (25*12/0.2524)*( (1+0.2524/12)^6 - 1 ) B = 170.453723678253 B = 170.45
anonymous
  • anonymous
this is the remaining balance?
jim_thompson5910
  • jim_thompson5910
So what this means is that if you buy a TV that costs 289.99 and you make 6 monthly payments during the deferment period, this will mean that you would still owe $170.45 after the deferment period is over
jim_thompson5910
  • jim_thompson5910
6 monthly payments of $25*
anonymous
  • anonymous
this is number 1 right?
jim_thompson5910
  • jim_thompson5910
yes
anonymous
  • anonymous
thats easier to understand then i expected actually! haha lets move on to number two
jim_thompson5910
  • jim_thompson5910
ok now we use the monthly payment formula since it says that we don't have to show work, we can use a monthly calculator instead which method do you want to use?
anonymous
  • anonymous
we can just use the calculator:) its much easier
jim_thompson5910
  • jim_thompson5910
ok great, go here then http://www.bankrate.com/calculators/mortgages/loan-calculator.aspx and type in 170.45 into the loan amount box, 5 in the years box, and 25.24 in the rate box and hit calculate tell me what you get
anonymous
  • anonymous
ok one sec :)
jim_thompson5910
  • jim_thompson5910
ok
anonymous
  • anonymous
i got 5.03?
jim_thompson5910
  • jim_thompson5910
me too
jim_thompson5910
  • jim_thompson5910
that's the monthly payment and the answer for #2
jim_thompson5910
  • jim_thompson5910
for #3, during the deferment period you paid 25*6 = 150 dollars then after the deferment period, you paid 60*5.03 = 301.8 dollars (since 5 years = 60 months) in total you paid 150 + 301.8 = 451.80 dollars the total cost is therefore 451.80 dollars
jim_thompson5910
  • jim_thompson5910
#4 should be pretty straight forward
anonymous
  • anonymous
so 281.35?
jim_thompson5910
  • jim_thompson5910
no you subtract 451.80 - 289.99
jim_thompson5910
  • jim_thompson5910
this is to find out how much extra you pay over the long run (if you finance instead of just pay all of the $289.99 at once)
anonymous
  • anonymous
161.81? :)
jim_thompson5910
  • jim_thompson5910
yep
anonymous
  • anonymous
for the next little section i know im going to have some trouble because thiese questions dont include the minimum payment...
jim_thompson5910
  • jim_thompson5910
ok for #1 in the next section, you are going to use the formula that is B = P(1+i)^(nt)
jim_thompson5910
  • jim_thompson5910
In this case P = 289.99 i = 0.2524/12 n = 12 t = 6/12 = 0.5
anonymous
  • anonymous
i didnt get 0.5??
jim_thompson5910
  • jim_thompson5910
t is time in years so 6 months = 6/12 = 0.5 years
jim_thompson5910
  • jim_thompson5910
that's why t = 0.5
anonymous
  • anonymous
oh i miscalculated it. now i got it:)
jim_thompson5910
  • jim_thompson5910
ok great
anonymous
  • anonymous
ok what do we do for number 2?
jim_thompson5910
  • jim_thompson5910
what did you get for #1
anonymous
  • anonymous
.05?
jim_thompson5910
  • jim_thompson5910
no that's not the answer to #1
jim_thompson5910
  • jim_thompson5910
use the formula I wrote above
anonymous
  • anonymous
170.45
jim_thompson5910
  • jim_thompson5910
no that was the answer to #1 from part 1
anonymous
  • anonymous
oh i thought thats what you meant
jim_thompson5910
  • jim_thompson5910
no i mean #1 from part 2
anonymous
  • anonymous
i dont know? i dont know how to find the mpnthly pay ment....
jim_thompson5910
  • jim_thompson5910
plug these values P = 289.99 i = 0.2524/12 n = 12 t = 6/12 = 0.5 into the formula below B = P(1+i)^(nt)
anonymous
  • anonymous
wouldnt that give me the same exact answer since we already plugged these numbers into this formula?
jim_thompson5910
  • jim_thompson5910
no it's much higher than 170.45
anonymous
  • anonymous
ok one sec.
jim_thompson5910
  • jim_thompson5910
ok
anonymous
  • anonymous
so B= 328.566?
jim_thompson5910
  • jim_thompson5910
no
jim_thompson5910
  • jim_thompson5910
oh wait, hold on
anonymous
  • anonymous
what? i dont understnad i plugged them all and and solved it...
jim_thompson5910
  • jim_thompson5910
sorry made a typo, I'm getting 289.99(1+0.2524/12)^(12*0.5) = 328.565943133299 so you are correct
jim_thompson5910
  • jim_thompson5910
so the answer to #1 in part 2 is 328.57
anonymous
  • anonymous
oh whew! and woops i thought this was the answer to number 2 in part 2 lol
jim_thompson5910
  • jim_thompson5910
no you use that calculator you used from part 1
jim_thompson5910
  • jim_thompson5910
to answer #2 in part 2
anonymous
  • anonymous
oh! let me try this one on my own hold on just a sec :)
anonymous
  • anonymous
oh gosh not even close. i dont know what to plug in
jim_thompson5910
  • jim_thompson5910
328.57 in the loan amount box 5 in the years box 25.24 in the rate box
anonymous
  • anonymous
ok one sec
anonymous
  • anonymous
$9.69
jim_thompson5910
  • jim_thompson5910
good
anonymous
  • anonymous
yay!
jim_thompson5910
  • jim_thompson5910
to answer #3, you need to multiply the number of months (60) by the monthly payment ($9.69) to get the total cost
anonymous
  • anonymous
581.4?
jim_thompson5910
  • jim_thompson5910
good
anonymous
  • anonymous
thats the answer to number #3? it seems like we did more work in part 1 number #3? rather than this onw?
jim_thompson5910
  • jim_thompson5910
well that's because back in part 1, there's the amount you add on during the deferment period
jim_thompson5910
  • jim_thompson5910
but you don't have to worry about that in this part
anonymous
  • anonymous
oh gotcha! that makes sense:)
anonymous
  • anonymous
now number 5 :)
jim_thompson5910
  • jim_thompson5910
what did you get for #4
anonymous
  • anonymous
oh my gosh sorry ahah im getting ahead of myself. i meant number 4
jim_thompson5910
  • jim_thompson5910
#4 is pretty straight forward, tell me what you get
anonymous
  • anonymous
38.58!
jim_thompson5910
  • jim_thompson5910
you are subtracting the original cost from the total cost 581.4-289.99 = ??
anonymous
  • anonymous
291.41
jim_thompson5910
  • jim_thompson5910
good
jim_thompson5910
  • jim_thompson5910
for the last question #5, you need to divide 289.99 by 6 to get 289.99/6 = 48.3316666666667 then you round that up to the nearest penny to get 48.34 so the monthly payment of $48.34 is guaranteed to pay off the $289.99 bill before interest kicks in
anonymous
  • anonymous
so 48.34?
jim_thompson5910
  • jim_thompson5910
yes
anonymous
  • anonymous
i was confused a little bit. i got it now! Can you help me with one more section?
jim_thompson5910
  • jim_thompson5910
glad it's making sense and sure
anonymous
  • anonymous
its just the analysis :)
anonymous
  • anonymous
1 Attachment
jim_thompson5910
  • jim_thompson5910
ok tell me what you got for this
anonymous
  • anonymous
what do you mean?
jim_thompson5910
  • jim_thompson5910
how far did you get with this section
anonymous
  • anonymous
oh im still on number 1
jim_thompson5910
  • jim_thompson5910
so any ideas what the difference between the total cost and the original cost represents?
anonymous
  • anonymous
it represents which one is better?
jim_thompson5910
  • jim_thompson5910
not quite
jim_thompson5910
  • jim_thompson5910
the TV originally costs $289.99 but if you pay more overall ($451.80) when you use the deferment plan, then that difference is the amount of total interest you pay
anonymous
  • anonymous
so it basically represents the total amount you pay for the tv?
jim_thompson5910
  • jim_thompson5910
it's the amount extra you pay for delaying the payments and spreading them out more
jim_thompson5910
  • jim_thompson5910
so that's what you have to worry about: if you pay less per month or put off payments (ie defer them), then you end up paying more overall
jim_thompson5910
  • jim_thompson5910
you could either buy the TV completely and pay $289.99 and this is a one time payment (or could be done within 6 months) OR you could spend $451.80 if you pay the min payment of $25 during the deferment period and then pay the monthly payment of $5.03 for the next five years so you can see that you pay a lot more money for the TV in the long run over the 5 year period
anonymous
  • anonymous
ooooh :) i get it now haha
jim_thompson5910
  • jim_thompson5910
yes this is why credit is dangerous and why people get into trouble with it
anonymous
  • anonymous
yikes! and number 2 i say no because i would only have to pay $48.34 a month is i dont pay with the minimum payment
jim_thompson5910
  • jim_thompson5910
correct, the min payment is not enough to buy the TV
jim_thompson5910
  • jim_thompson5910
that's another thing you have to make sure you don't do: do NOT go for the min payment or you will spend a lot longer paying it off and you'll be spending a lot more money in the long run
anonymous
  • anonymous
exactly:) but i dont know about number 3 :(
anonymous
  • anonymous
@jim_thompson5910
jim_thompson5910
  • jim_thompson5910
what was the total cost in part 1?
anonymous
  • anonymous
170.45
jim_thompson5910
  • jim_thompson5910
no, the total cost
anonymous
  • anonymous
oh161.81
anonymous
  • anonymous
@jim_thompson5910
jim_thompson5910
  • jim_thompson5910
no
jim_thompson5910
  • jim_thompson5910
look at #3 in part 1
anonymous
  • anonymous
oh 451.80 dollars!
jim_thompson5910
  • jim_thompson5910
yes that's the total cost if you do the min payment during the deferment period
jim_thompson5910
  • jim_thompson5910
what is the total cost if you don't do the min payment during the deferment period
anonymous
  • anonymous
581.4?
jim_thompson5910
  • jim_thompson5910
now subtract the two figures
anonymous
  • anonymous
129.6?
anonymous
  • anonymous
i think?
jim_thompson5910
  • jim_thompson5910
good
jim_thompson5910
  • jim_thompson5910
that's the difference between the two plans so if you don't make the min payments, then you pay 129.60 more dollars
jim_thompson5910
  • jim_thompson5910
so you can see why that law is put in place
anonymous
  • anonymous
why?
jim_thompson5910
  • jim_thompson5910
because you pay more if you don't make the min payment
jim_thompson5910
  • jim_thompson5910
so it's like a way to stop companies from getting away with charging too much for a product
anonymous
  • anonymous
what about number 5?
anonymous
  • anonymous
@jim_thompson5910
jim_thompson5910
  • jim_thompson5910
what do you think about #5
jim_thompson5910
  • jim_thompson5910
If you're in college, then perhaps you have a college loan so you may know a thing or two about them
anonymous
  • anonymous
im not in college :( but i think it has something to do with paying off payments during a period of time?
jim_thompson5910
  • jim_thompson5910
usually the interest rates for student loans are much lower than deferment plans you find in stores these interest rates are lower because some loans are subsidized by the government (ie they pay for a portion of it to keep the rates low)
jim_thompson5910
  • jim_thompson5910
also there's a lot more competition which is why the rates are lower
jim_thompson5910
  • jim_thompson5910
so instead of finding a 25.24% interest rate (which is really high), you'll find interest rates like 3.4% or 6.8%
anonymous
  • anonymous
i dont see what this has to do with them being similar or different? i dont get it
jim_thompson5910
  • jim_thompson5910
I just explained how they're different, their rates are different (usually much lower)
anonymous
  • anonymous
oh! because of the rates! i got it now. Thank you so much for helping me with my assignments. I take an online math class so its hard to understand the material but for some reason i understand it after you explain it steo by step!
jim_thompson5910
  • jim_thompson5910
glad it's making sense now
anonymous
  • anonymous
thank you so so so soooo much!
jim_thompson5910
  • jim_thompson5910
you're very welcome

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