Question

Amelia uses her credit card to buy some clothes for $678.34. She can pay off up to $235 per month. The card has an annual rate of 21.7% compounded monthly. How much total interest will she pay?

A) $11.93

B) $24.65

C) $29.72

D) $12.27

Answer 1

Amelia will pay a total interest of $0.

Step-by-step explanation:

To calculate the total interest Amelia will pay, we need to find out how many months it will take her to pay off the entire $678.34. To do this, we divide the total amount by the maximum payment she can make each month:

$678.34 / $235 = 2.885 (rounded to 3)

So it will take Amelia 3 months to pay off the entire amount. Now, we can calculate the total interest using the formula:

Interest = Total amount - Principal

Principal = $678.34, Total amount = Principal + Interest

Using the formula, we get:

Interest = Total amount - Principal

Interest = (Principal + Interest) - Principal

Interest = $678.34 - $678.34

Therefore, Amelia will pay a total interest of $0.