Question

Your parents’ original purchase price was $1,550.00 plus 7.25% sales tax. They enter into an agreement where the interest (11.75% APR) is waived for the first 12 months provided they make the required monthly payments; otherwise the interest is accrued from the date of purchase. They miss the first payment due date. The late fee is $29.00. How much is the interest?
(1 point)
Responses

$195.33
$195.33

$16.27
$16.27

$182.13
$182.13

$15.18

Answer 1

Sales tax = 1550 × 0.0725 = $112.38
Total principal = 1550 + 112.38 = $1,662.38
Monthly interest = 1,662.38 × (0.1175/12) = $16.28 ≈ $16.27 (closest choice)

Answer: $16.27