Question

(Cash Versus Financing MC)

A video streaming service subscriber pays $99.99 per year for unlimited streaming. The subscriber pays for the service using a credit card with a 23.99% APR. The subscriber makes a payment of $15 for three months and then pays the balance off at the end of the fourth month. Determine how much additional interest the subscriber paid by paying the balance off in four months instead paying it off during the grace period.

$7.67
$2.56
$6.41
$1.15

Answer 1

Monthly interest = (APR/12)
23.99%/12 = 1.9991%
$99.99 x 1.9991%/100 = $1.9990
$99.99 + $1.9990 - %15 = $86.9890
$86.9890 x 1.9991%/100 = $1.7386
$86.9890 + $1.7386−$15=$73.7276
$73.7276 x 1.9991%/100 =$1.4734
$73.7276 + $1.4734−$15=$60.2010
$60.2010 x 1.9991%/100 = $1.2034
\$1.9990 + \$1.7386 + \$1.4734 + \$1.2034 = \$6.4144
Round: $6.41

Answer 2

sorry had to help my nana real quick

Answer 3

No it's fine ^^