Fiona installed a new pool for $9,940 using a 12-month deffered payment plan with interest rate of 22.53%. What is the balance after the deferment period if payment of $397 are made each month?
Fiona installed a new pool for $9,940 using a 12-month deffered payment plan with interest rate of 22.53%. What is the balance after the deferment period if payment of $397 are made each month?
The last sentence of your question is ambiguous. When a loan is deferred for any period of time, it however continues to earn interest at the stated rate. So, if the loan is deferred for 12 months in this case, it continues to grow at 22.53%(which I will assume to be compounded monthly.)
Then the balance after 12 months will be:$12,425.84.
Now, this is where your sentence is not clear!. If she starts to make monthly payments of $397 @ 22.53% on this balance of $12,425.84, it will still take her:47.63 months to pay the loan off. So, her total cost will be: $397 x 47.63 =$18,909.11, by the time she pays off the entire loan.
