You purchase a computer for $875.00 plus 5% sales tax. You decide to finance it through the store's 0% program for 12 months. The terms state that you must pay $100.00/month and that if you miss a payment, you will be assessed a late fee of $39.00 plus the interest accrued to that point on the initial amount at a 14.25% APR. If you miss a payment in the eighth month, how much interest will you be charged? (1 point) Responses $83.13 $83.13 $16.63 $16.63 $87.28 $87.28 $58.19

Question

You purchase a computer for $875.00 plus 5% sales tax. You decide to finance it through the store's 0% program for 12 months. The terms state that you must pay $100.00/month and that if you miss a payment, you will be assessed a late fee of $39.00 plus the interest accrued to that point on the initial amount at a 14.25% APR. If you miss a payment in the eighth month, how much interest will you be charged? (1 point) Responses $83.13 $83.13 $16.63 $16.63 $87.28 $87.28 $58.19

Answer 1

To calculate the interest charged, we need to find the interest accrued on the initial amount ($875.00) for 8 months at a 14.25% APR.

First, we calculate the monthly interest rate by dividing the annual interest rate by 12:
14.25% / 12 = 0.11875

Next, we calculate the interest for each month using the formula:
interest = principal * monthly interest rate = $875.00 * 0.11875 = $103.59

Finally, we multiply the interest for one month by the number of months missed:
$103.59 * 8 = $828.72

Therefore, if you miss a payment in the eighth month, you will be charged $828.72 in interest.