Question

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.

Answer 1

$17.596 by paying the balance off in four months instead of during the grace period.

Explanation:

calculate the interest rate per month by dividing the annual percentage rate (APR) by 12:

23.99% / 12 = 1.9992%

Next, let's calculate the balance remaining after the three monthly payments of $15 each:

$99.99 - ($15 * 3) = $99.99 - $45 = $54.99

Now, let's calculate the interest charged for the four months on the remaining balance of $54.99:

$54.99 * (1.9992% / 100) * 4 = $54.99 * 0.019992 * 4 = $4.399 * 4 = $17.596

SKEEYEEEE