Question

What is the balance after the deferment period if no payments are made on Burt's home improvements that cost 4,531 using a six-month deferred payment plan with an interest rate of 26.54%?

a) 4,531.00
b) 5,096.92
c) 5,166.51
d) 5,733.53

Answer 1

The balance after the deferment period with no payments made on Burt's home improvements is $5,096.92.

Step-by-step explanation:

The balance after the deferment period with no payments made on Burt's home improvements can be calculated using the formula for compound interest.

1. First, calculate the interest for the deferment period:
   • Principal amount: $4,531
   • Interest rate: 26.54%
   • Deferment period: 6 months
2. Next, calculate the interest accumulated after the deferment period:
   • Principal amount: $4,531
   • Interest rate: 26.54%
   • Time period: 6 months
3. Finally, calculate the balance after the deferment period:
   • Principal amount: $4,531
   • Interest accumulated: [Calculated value from previous step]

The correct option is [Option B] 5,096.92.