Julio purchased some power tools totaling $2,174 using a six-month deferred payment plan with an interest rate of 28.19%. He did not make any payments during the deferment period. What will the total cost of the power tools be if he must pay them off the power tools within the two years after the deferment period?

Question

A. $2,499.00
B. $3,297.84
C. $2,174.00
D. $4,122.30

Answer 1

First, we need to find the interest that will be applied to the cost of the power tools after the 6-month deferment period. To do this, we'll multiply the original cost by the interest rate:

$2,174 * 0.2819 = $613.08

Now we can add the interest to the original cost of the power tools:

$2,174 + $613.08 = $2,787.08

Julio now has to pay off the $2,787.08 in monthly payments over the next 2 years, which is 24 months. To find the monthly payment, we can divide the total cost by the number of months:

$2,787.08 / 24 = $116.13

Now we can multiply the monthly payment by the number of months to find the total cost of the power tools:

$116.13 * 24 = $2,787.12 (rounded to 2 decimal places).

The total cost of the power tools will be $2,787.12.

The correct answer is not given in the options provided.