Asked by Maricela MacAuley on May 21, 2024
Verified
Cedric purchased a new refrigerator and stove at Home Depot for $3,729 on a deferred payment plan with no down payment and no payment at all for six months.If the entire $3,729 is paid in full before three months is up,there is no interest.If it is not paid in full within the six months,there is a finance charge with an APR of 25.4% applied each month going back to the first month.If Cedric makes the full payment a week after the six months expired,what is the finance charge?
Deferred Payment Plan
A payment arrangement that allows payment to be postponed for a certain period, often used in loans and purchase agreements.
Finance Charge
The total cost of borrowing, including interest and any other fees, applied to credit or loan accounts.
- Analyze the implications of different payment plans and their associated finance charges.
- Calculate the total finance charges on installment plans and loans.
Verified Answer
MD
Michael DeboodtMay 22, 2024
Final Answer :
Find the finance charge on the first month by multiplying 3,729 by the monthly interest rate and adding it to the existing balance.Find the finance charge for the second and third months similarly. 
Learning Objectives
- Analyze the implications of different payment plans and their associated finance charges.
- Calculate the total finance charges on installment plans and loans.