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

anonymous · Answer

25.9/12 = 2.16% Compounding monthly interest

anonymous · Answer

Initial Amount: 971.20
Payments: 400 each month
971.20 * .0216 = 20.98
992.18 - 400 = 592.18
592.18 * .0216 = 12.79
604.97 - 400 = 204.97
204.97 * .0216 =  

Interest paid:
20.98
12.79
4.43

Interest combined: 38.2

Total Payment: 971.20 + 38.2 = $1009.40
Very close to the first answer, would this just be from my calculator and only bring over the first 3 numbers beyond the decimal point?

fallenangelorchid · Answer

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

anonymous · Answer

Yeah I applied the interest to the initial amount owed aswell

fallenangelorchid · Answer

So in that case, your correct.

anonymous · Answer

Sweet, thanks for the second opinion :)

fallenangelorchid · Answer

Anytime lad.