Question

Newton uses a credit card with a 18.6% APR, compounded monthly, to pay for a cruise totaling $1,920.96. He can pay $720 per month on the card. What will the total cost of this purchase be?

Answer 1

You should ask your parent/guardian or teacher if needed! Merry Christmas!

Answer 2

The principal is $1920.96 . APR 18.6% . Interest is compounded monthly . Formula for compound interest is A = P (1+r/t) ^n(1/t) P = principal amount (the initial amount you borrow) which is $1920.96 r = annual rate of interest (as a decimal) = 0.186 t = period A = amount of money accumulated after n years, including interest. n = number of times the interest is compounded per year = 12 times . A = P (1+r/t) ^n(1/t) A = 1920.96*(1+0.186/12)^12(1/12) = 1920.96(1+1.0155) = 1951.04 which is the total cost of this purchase.