What will the total cost of his purchase be?

Question

Michaelopens a store credit card when he purchases a new computer. The interest rate is 25.24%. he charges $2,380 to the card, and can pay $850 per month. What will the total cost of his purchase be?

Answer 1

First find the monthly interest rate:

25.24% ÷ 12 = 2.1033% per month

Starting balance = $2,380

After the first month:

Interest = $2,380 × .021033 = $50.06

$2,380 + $50.06 - $850 = $1,580.06

After the second month:

Interest = $1,580.06 × .021033 = $33.23

$1,580.06 + $33.23 - $850 = $763.29

After the third month:

Interest = $763.29 × .021033 = $16.05

Final payment = $763.29 + $16.05 = $779.34

Total paid:

$850 + $850 + $779.34 = $2,479.34

So the total cost of the computer is approximately $2,479.34.