SOLUTION: Sharon purchased a sprinkler system for $1,950 using a six-month deferred payment plan. The interest rate after the introductory period is 23.99%. No down payment is required, but

Algebra ->  Finance -> SOLUTION: Sharon purchased a sprinkler system for $1,950 using a six-month deferred payment plan. The interest rate after the introductory period is 23.99%. No down payment is required, but       Log On


   

Question 1095586: Sharon purchased a sprinkler system for $1,950 using a six-month deferred payment plan. The interest rate after the introductory period is 23.99%. No down payment is required, but there is a minimum monthly payment of $25. What is the balance at the beginning of the seventh month if only the minimum payment is made each month during the introductory period?
A $2,045.91
B $1,950.00
C $2,195.91
D $1,800.00
Answer by jim_thompson5910(35256) About Me  (Show Source):
You can put this solution on YOUR website!
If you pay a minimum monthly payment of $25 for six months, then you pay a total of 6*25 = 150 dollars

Subtract this from the balance of 1950 to get 190-150 = 1800

So $1,800.00 is the balance at the beginning of the seventh month.

Note: No interest is paid or charged during the initial 6 month period. After these six months, the interest rate jumps to 23.99% which is very high. This is why it is encouraged to pay off any balances on high interest accounts (such as credit cards).