+84 Nancy uses a credit card with a 20.1% APR, compounded monthly, to pay for a hotel stay totaling $891.05. She can pay $350 per month on the card. What will the total cost of this purchase be?
Nyesha_52: Do you know how to do an amortization schedule?
1) - Find the monthly rate as follows: 20.1/1200 =.01675 - This is the monthly interest rate.
Multiply this monthly interest rate x $891.05 =$14.93- This is interest for the first month.
Subtract this interest from the monthly payment of $350: $350 - $14.93 =$335.07 - this is the principal you apply to the loan: $891.05 - $335.07 =$555.98 - this is the balance of the loan after the 1st pmt.
Interest Principal Balance
$891.05
1- $14.93 $335.07 $555.98
2- $9.31 $340.69 $215.29
3- $3.61 $215.29 $0.00
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Totals: $27.85 $891.05 $0.00
Then the total cost is: Principal + Interest =$891.05 + $27.85 =$918.90 .
P.S. You should learn how to use a "spreadsheet" such as "Excel", which will do all this automatically for you. Good luck to you.
