Problema Solution
Lamar uses his credit card to purchase a new video game system for $375.19. He can pay off up to $175 per month. The card has an annual rate of 19.2% compounded monthly. How much total interest will he pay?
Answer provided by our tutors
Since the annual rate of 19.2% is compounded monthly, the monthly interest would be:
19.2/12= 1.6%
Therefore, at the end of the first month and after payment, the balance would be:
balance after payment=375.19(1.016)-175=$206.19304
After the second month and payment:
Balance after payment=206.19304(1.016)-175=$34.49212864
Finally the finally payment would be:
Final payment=34.49212864(1.016)=$35.044
The Total amount paid would be:
175+175+35.044=$384.044
Therefore, the total amount of interest paid would be:
384.044-375.19=$8.854