How much will Frederick pay for the television if he pays the entire amount on September 15 of the following year?

SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter5: Business Deductions
Section: Chapter Questions
Problem 45P
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PST = 7% and GST = 5% Frederick Easton Edison purchases a television from Company F on August 15. He can either pay for the television set at the time of purchase, or purchase it on the company's buy-now, pay-later plan. He chooses to purchase it on the company's buynow, pay-later plan. On the buy-now, pay-later plan, the price is $1995.95 (plus taxes). At the time of purchase, Frederick must pay the taxes and a $40 administration fee. He has one year to pay for his purchase. If he pays during this time period, he will not be charged interest. After one year, Company F charges customers 2.25% simple interest per annum, charged monthly, on any outstanding amount. Assume that he is charged interest from the date of purchase on the outstanding amount. How much will Frederick pay for the television if he pays the entire amount on September 15 of the following year?
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