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?
(1 point)
Responses

$118.75
$118.75

$10.39
$10.39

$9.90
$9.90

$124.69

Answer 1

Sales price with tax = 950 × 1.05 = $997.50.
Monthly interest rate = 12.5% / 12 = 1.0416667%.
Interest for one month = 0.010416667 × 997.50 ≈ $10.39.

So the interest is $10.39.