Naomi uses a credit card with a 25.9% APR, compounded monthly, to pay for a hotel stay totaling $971.20. She can pay $400 per month on the card. What will the total cost of this purchase be?

$1,009.36

$1,222.74

$1,180.56

$971.20

Question

Naomi uses a credit card with a 25.9% APR, compounded monthly, to pay for a hotel stay totaling $971.20. She can pay $400 per month on the card. What will the total cost of this purchase be?

 $1,009.36

 $1,222.74

 $1,180.56

 $971.20

dumbcow · Answer

after paying 400 for 1st month...balance is 571.20
apply interest
$$571.20*\frac{.259}{12} = 12.3284$$
2nd month balance is 583.5284
pay 400 ...balance is 183.5284
apply int
$$183.5284*\frac{.259}{12} = 3.961$$
3rd month balance is 187.489

total; 987.49

...that isn't an option?
are we supposed to assume she paid the 1st month?

anonymous · Answer

Yes I think we're supposed to assume that

dumbcow · Answer

ok answer is 1009.36, if you apply int to 1st month as well thats what you get

anonymous · Answer

Thanks!

dumbcow · Answer

yw