Final answer:
The total amount of interest paid is $232.66.
Step-by-step explanation:
To determine the total amount of interest paid, we need to calculate the number of months it takes to pay off the balance. Since the customer pays $80 per month, we can divide the initial balance of $900 by the monthly payment of $80 to find out how many months it will take. In this case, it will take 11.25 months to pay off the balance (900 / 80 = 11.25).
Next, we need to calculate the monthly interest rate by dividing the APR by 12 (29.99% / 12 = 0.0249925). We'll convert it to a decimal by moving the decimal two places to the left (0.0249925 becomes 0.00249925).
Now, we can calculate the total amount of interest paid by multiplying the outstanding balance each month by the monthly interest rate. The outstanding balance for the first month is $900, so the interest paid for the first month is $900 * 0.00249925 = $2.249325. For the second month, the outstanding balance is $820 ($900 - $80), so the interest paid is $820 * 0.00249925 = $2.0480785. This process continues for each month until the balance is paid off. Adding up all the interest paid for each month gives us the total amount of interest paid.
By using this method, the total amount of interest paid is $232.66.