Question

Lamar uses his credit card to purchase a new video game system for $375.19. He can pay off up to $175 per month. The card has an annual

rate of 19.2% compounded monthly. How much total interest will he pay?

Answer 1

The total interest Lamar will pay is $16.27.

Step-by-step explanation:

To calculate the total interest Lamar will pay, we need to find the number of months it will take for him to pay off the entire balance.

First, we can find the monthly payment by dividing the total debt of $375.19 by the maximum monthly payment of $175. This gives us 2.144 months.

Using the formula
`A = P(1 + r/n)^(nt),`

where A is the total amount, P is the principal, r is the annual interest rate, n is the number of compounding periods per year, and t is the number of years, we can calculate the total interest.

Plugging in the values, we get -

`A = 375.19(1 + 0.192/12)^(12*2.144)`

= $391.46.

Therefore, Lamar will pay a total interest of $391.46 - $375.19 = $16.27.