Question

Nicole used her credit card to buy a $1,255 mattress. Her credit card has an APR of 11.56%, compounded monthly, and the mattress was the only purchase on the card. Nicole paid off the mattress after two and a half years. If the sales tax in Nicole’s area is 9.08%, how much interest did Nicole pay in total? (Round all dollar values to the nearest cent.) a. $213.85 b. $456.20 c. $196.10 d. $327.86

Answer 1

its a

Explanation:

Answer 2

b. $456.20 is the answer.

Explanation:

The cost of the mattress = $1255

APR of the credit card = 11.56% or 0.1156

Time = 2.5 years

n = 12

Sales tax in Nicole's area = 9.08% or 0.0908

So, sales tax amount =
`0.0908*1255=113.954`

Total amount becomes(p) = 1255+113.954 =$1368.954

Compound interest formula =
`P(1+(r)/(n))^(nt)`

Putting above values in the formula:

`1368.954(1+(0.1156)/(12))^(2.5*12)`

`1368.954(1.0096)^(30)`

= $1823.351

So, interest paid becomes = 1823.351-1368.954 = $454.397 closest to $456.20

Hence, option B is the answer.