Problema Solution
Nicole used her credit card to buy a $1,255 mattress. Her credit card has an APR of 11.56%, compounded monthly, and the mattress was the only purchase on the card. Nicole paid off the mattress after two and a half years. If the sales tax in Nicole’s area is 9.08%, how much interest did Nicole pay in total? (Round all dollar values to the nearest cent.)
Answer provided by our tutors
the sales tax is 9.08% of $1,255:
1255 *.0908= $113.954
the cost of the mattress is:
1255+113.954= $1368.954
now we can consider:
P = $1368.954 principal
r = 0.1156 or 11.56%
t = 2.5 years
n = 12*2.5 = 30
A = the future value
A = 1368.954(1+0.1156/12)^(2.5*12)
A = $1825.15
click here to see the step by step calculation:
the interest paid is the difference:
1825.15 - 1368.954 = $456.20
$456.20 interest paid by Nicole.