Question

NO LINKS!! Please help me with this problem Part 3hh

Joe buys a sound system for $650 with his credit card. The card has an annual interest rate of 19.85% compounded monthly.

If Joe pays $60 a month (instead of $21.45) towards his credit card balance:

a. How long will it take him to pay for the sound system in full?

b. What's the total amount he will pay for the sound system?

c. What's the total cost of using his credit card for this purchase?


THIS IS NOT MULTIPLE CHOICE!! ​

Answer 1

a. 11 months

b. $713.68

c. $63.68

Explanation:

Given that Joe makes a minimum payment of $60 on his credit card purchase of $650 with an APR of 19.85%, you want to know ...

• how long until the purchase is paid off
• the total amount paid
• the cost of using the credit card

a. Payoff time

If the balance is reduced by $60 per month, it will take ...

$650/($60/mo) ≈ 10.8 months

to pay off the balance.

Joe will be making payments for 11 months.

b. Payoff amount

The total amount Joe pays for his sound system is the sum of its initial cost and the total of interest payments. That sum is ...

cost + interest = total paid

$650 +63.68 = $713.68

Joe will pay a total of $713.68.

c. Credit charges

The total amount of interest Joe pays is $63.68.