Question

Bethany opened a store credit card to purchase a TV for $589. She put the entire purchase on the credit card. Her APR is 29.99% and the minimum payment is 5%. Assuming she makes only minimum payments, what is the remaining balance on her card after 3 months?
$504.99

$532.24

$545.90

$574.27

Answer 1

29.99% = .2999
.2999/12 = .02499 (rounded to .025)
add 1 = 1.025

589 x 1.025 = 603.73

minimum payment is 5% of 603.73
.05 x 603.73 = 30.19 per month
For 3 months it is (30.19 x 3) = 90.57

603.73 - 90.57 = 513.16
This IS NOT the right answer, but I don't know what I am doing wrong.
I am trying to go by this...
http://www.ehow.com/how_5064522_calculate-card-monthly-payments-apr.html

somebody see if they can do this correctly...PLEASE

Answer 2

There are 2 ways to do this, but unfortunately, none of them get to any of the answers here (it gets close to one though)



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Method # 1: Make monthly payment, then calculate interest on remaining balance


Monthly Payment: 589 * 0.05 = 29.45


1st month

Make Monthly Payment: 589 - 29.45 = 559.55
Add on interest: 559.55 + 29.99% = 559.55 + (1/12)*0.2999*559.55 = 573.53
Remaining Balance: 573.53


2nd month

Make Monthly Payment: 573.53 - 29.45 = 544.08
Add on interest: 544.08 + 29.99% = 544.08 + (1/12)*0.2999*544.08 = 557.68
Remaining Balance: 557.68


3rd month

Make Monthly Payment: 557.68 - 29.45 = 528.23
Add on interest: 528.23 + 29.99% = 528.23 + (1/12)*0.2999*528.23 = 541.43
Remaining Balance: 541.43


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Method # 2: Calculate interest, then make monthly payment


Monthly Payment: 589 * 0.05 = 29.45



month # 1

Add on interest: 589 + 29.99% = 589 + (1/12)*0.2999*589 = 603.72
Make Monthly Payment: 603.72 - 29.45 = 574.27
Remaining Balance: 574.27




month # 2

Add on interest: 574.27 + 29.99% = 574.27 + (1/12)*0.2999*574.27 = 588.62
Make Monthly Payment: 588.62 - 29.45 = 559.17
Remaining Balance: 559.17




month # 3

Add on interest: 559.17 + 29.99% = 559.17 + (1/12)*0.2999*559.17 = 573.14
Make Monthly Payment: 573.14 - 29.45 = 543.69
Remaining Balance: 543.69


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Answer 3

So if you were to pick an answer yours would be?

Answer 4

well I'm getting close to $545.90

I'm not sure why it's not landing exactly on it

but since it's off by a few dollars (which is not much), I'd say the answer is $545.90

Answer 5

did they give you any formulas to work with?

Answer 6

They did but i cant seem to find it. So ill just go with 545.90. Thanks alot for your time and help!

Answer 7

and I'm using a bunch of other tools and calculators and I'm getting the same thing pretty much

for instance, this is one tool I used

http://www.calculator.net/credit-card-calculator.html?balance=589&rate=29.99&minimum=29.45&payoffoption=0&fixedpaymentamount=35&x=98&y=15

and it gives the remaining balance on month #3 to be 543.70, which is one cent off of what I got

Answer 8

let me know if that answer of $545.90 is the correct one or not

Answer 9

I was wondering how this was supposed to be done....I guess I was just " way off ". Sorry about that Blake95.

Answer 10

i could be off too...or there may be a typo? idk

Answer 11

seems odd though how the calculator is giving something way different from the answer choices

Answer 12

Ill let you guys know if thats the right answer! And no problem at all Kellie! I appreciate all the free help!

Answer 13

It was right!

Answer 14

ok that's great, just got to figure out if that was a typo or if I was using the wrong method/formula