SOLUTION: Dale buys a big screen TV at a furniture store that offers zero down and no payments for 15 months. Unfortunately, he is unable to make his first payment on the 16th month, and h

Algebra ->  Finance -> SOLUTION: Dale buys a big screen TV at a furniture store that offers zero down and no payments for 15 months. Unfortunately, he is unable to make his first payment on the 16th month, and h      Log On


   

Question 1037869: Dale buys a big screen TV at a furniture store that offers zero down and no payments for 15 months. Unfortunately, he is unable to make his first payment on the 16th month, and he is charged interest for all 16 months of financing. The TV originally cost $950.00, and the interest rate is 7.95%/a compounded monthly. Calculate the total amount Dale now owes on his TV.
Answer by Theo(13342) About Me  (Show Source):
You can put this solution on YOUR website!
the original price of the tv is 950 dollars.
the interest rate is 7.95% per year compounded monthly.
this means the monthly interest rate is 7.95% / 12 = .6625% per month.
divide that by 100 and you get a monthly interest rate of .00625.

the 950 initial cost is multiplied by 1.00625^16 to make it equal to 1049.59.

that's how much he owes on the tv after 16 months of non-payment.