Question

Robby is considering taking out a cash advance on his credit card to purchase a new television. His credit card offers cash advances up to $500.00 at an interest rate of 28%. If the television costs $350.00 and Robby plans to pay the balance of in 6 months, how much extra will he pay in interest to purchase the television?

a. $29.14
b. $63.18
c. $174.48
d. $379.08
Please select the best answer from the choices provided

Answer 1

350*[.28/12/1-(1+.28/12)^-6]

P=$63.19

63.19x6=279.14-350=$29.14

The answer is a.

Answer 2

$29.14

Explanation:

Given : His credit card offers cash advances up to $500.00 at an interest rate of 28%.

To find: If the television costs $350.00 and Robby plans to pay the balance of in 6 months, how much extra will he pay in interest to purchase the television?

Solution:

Monthly payment =
`m=(P * i)/(1-(1+i)^(-n))`

P = $350

n =6

rate of interest = 20% =0.28

So, rate of interest per month = i = 0.28/12

Substituting the values

`m=(350 * (0.28)/(12))/(1-(1+(0.28)/(12))^(-6))`

`m=63.1887591933`

So, he pays per month = $63.1887591933

So, he pays with interest for 6 months =
`63.1887591933 * 6`

=
`379.13255516`

The cost of television was $350

So, the amount he paid extra =
`379.13255516-350`

=
`29.14`

Hence he pay $29.14 extra in interest to purchase television.