Question

Your original purchase price was $950.00 plus 5% sales tax. You enter into an agreement where the interest (12.5% APR) is waived for the first 12 months provided you make the required monthly payments; otherwise the interest is accrued from the date of purchase. You missed the first payment due date. The late fee is $35.00. How much is the interest?
Responses

$118.75
$118.75 - no response given

$10.39
$10.39 - no response given

$9.90
$9.90 - no response given

$124.69
$124.69 - no response given

Answer 1

Total purchase = 950 + 5% = 997.50.
Monthly interest rate = 12.5% / 12 = 0.0104166667.
Interest for one month = 997.50 × 0.0104166667 = 10.390625 → $10.39.

(The $35 late fee is separate.)