Question

Larry uses his credit card to purchase a new video game system for $445.07 he can pay off off up to $200 per month the card has an annual rate of 13.6% compounded monthly how much total interest will he pay

Answer 1

It will take 3 months to payoff the balance. The total interest is $ 8.26.

Answer 2

Answer: $119.26

Explanation:

since the annual interest rate is compounded monthly the annual interest rate will be 13.6%/12 = 17/15%

first month payment:

$445.07 x 17/15% - $200 = $304.41 is the balance

second month payment:

$304.41 x 17/15% - $200 = $145.00 is the balance

thus

$145.00 x 17/15% = $164.33

hence total amount paid = $200 +$200 + $164.33 = $564.33

interest = total amount paid - cost = $564.33 - $445.07 = $119.26