An advertisement for a couch states:

Question

"Interest rates slashed to 9.9%!

Pay an annual percentage rate (APR) of 9.9% for 12 months 

Minimum down payment - $149

Fifty-two weekly payments of just $15.85"

 

The couch is advertised for $899. How many dollars does the couch actually cost a customer?

Answer 1

Based on the given information, the interest will be computed at the start of the loan.

 

So, $849 - 149 = $750.  That amount times the interest rate times the length of the loan will give the interest amount. The interest rate is 9.9%, and the length of the loan is 52 months = 4.333 years.

 

The interest will be $750 x 0.099 x 4.33 = $321.75

 

The monthly payments will total $15.85 x 52 = $824.20

 

The down payment was $149.00.

 

So, the total of all payments will be $1,294.95