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Salvatore s credit card has an APR of 14.9%, calculated on the previous monthly balance. His credit card record for the last 7 months is shown in the table below.

Salvatore s credit card has an APR of 14.9%, calculated on the previous monthly balance-example-1

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Part 1: The total amount that Salvatore has paid in interest over the 7 months is $65.23.

Part II: The total amount that Salvatore has made in payments over the 7 months is $150.

Part III: The amount of Salvatore's payments that has gone to paying down the principal on his account is $84.77.

Part IV: Salvatore's new balance at the end of month 8 (if there are no new charges) is $1,328.50.

Part V: The amount Salvatore will be charged for interest for month 8 is $16.60.

How the amounts are computed:

Part 1: Total interest over the 7 months = $65.23 ($6.62 + $7.61 + $10.02 + $10.54 + $14.52 + $15.92)

Part II: The total amount that Salvatore has made in payments over the 7 months = $150 ($25 x 6)

Part III: The amount of Salvatore's payments that has gone to paying down the principal on his account is $84.77 ($150 - $65.23).

Part IV: Salvatore's new balance at the end of month 8:

Balance at the end of month 7 = $1,336.90 ($1,281.91 + $79.99 - $25)

Balance at the end of month 8 = $1,328.50 ($1,336.90 + $16.60 - $25)

Part V: Amount Salvatore will be charged for interest for month 8 = $16.60 ($1,336.90 x 14.9%/12)

Complete Question:

Salvatore's credit card has an APR of 14.9% calculated on the previous monthly balance. His credit card record for the last 7 months is shown in the table below. Salvatore is trying to figure out what this all means. Help him by answering the following questions.

Part 1: What is the total amount that Salvatore has paid in interest over the 7 months?

Part II: What is the total amount that Salvatore has made in payments over the 7 months?

Part III: How much of Salvatore's payments has gone to paying down the principal on his account?

Part IV: What is Salvatore's new balance at the end of month 8?

Part V: What will Salvatore be charged for interest for month 8?

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