Question

FLVS Financial Algebra help (Credit card debt/payments)

Answer 1

Michael opens a store credit card when he purchases a new computer. The interest rate is 25.45%. He charges $2,380 to the card, and can pay $850 per month. What will the total cost of his purchase be?

$2,380.00

$2,480.20

$2,985.71

$3,160.20

Answer 2

I actually do FLVS too but your going to need to add more oh there we go

Answer 3

this is the question, I don't necessarily want an answer but I would like help on how to actually do this

Answer 4

Ya already know the principal is $2,380, the interest rate is 25.45%, and the monthly payment is $850. Here the question looks like: If we're paying $850 a month, at 25.45% interest, on a $2,380 loan, how long will it take to pay off the loan in full.. And how much interest will have been paid?

If you're able to calculate the amount of interest paid on the loan, then the total cost of the new computer would be $2,380 plus that interest.

Answer 5

@Light&Happiness
So would you first multiply the Principal and interest rate to have the monthly interest -
2380 x .2545 = 605.71
Then add that to the principal to have the monthly balance -
2380 + 605.71 = 2985.71
Then subtract the monthly payment -
2985.71 - 850 = 2135.71

So 2135.71 would be the new principal for month two?

Answer 6

Rinse and repeat using new monthly principal each time, calculating how many months it takes to pay it completely off, then I'm lost.

@Light&Happiness

Answer 7

I did the math and found out it would take 6 months to pay it off with the 6 month paying only 448.41 instead of 850.

I am completely lost. The principal x interest rate gives answer C.
Answer A is the original principal so that's not it either.
Answer B seems plausible because using the simple interest formula of P*r*t you get 2985.71 IF you use the time as 1 year. With it only taking 6 months to pay it off, it seems it would HAVE to be LESS THAN 2985.71.
However, 2480.20 seems to be really low for that high amount of interest rate.
Which leaves D as the complete shot in the dark guess. But I'm leaning towards B as well.