Simon recently received a credit card with an 12% nominal interest rate. With th

Question

Simon recently received a credit card with an 12% nominal interest rate. With the card, he purchased an Apple iPhone 5 for $370. The minimum payment on the card is only $10 per month.

a. If Simon makes the minimum monthly payment and makes no other charges, how many months will it be before he pays off the card? Round your answer to the nearest whole.

b. If Simon makes monthly payments of $30, how many months will it be before he pays off the debt? Round your answer to the nearest whole.

c. How much more in total payments will Simon make under the $10-a-month plan than under the $30-a-month plan. Make sure you use 3 decimal places for N. Round your answer to the nearest cent.

Explanation / Answer

Simon purchased Apple iphone for $ 370 on credit card rate of intrest = 12%

if minimum payment is $ 10 no of months required =44 months (calculated on credit card minimum payment calculator)

if minimum payment is $ 30 no of months required =13 months

the excess payment made with $ 10 per month payment= $ 440-$ 390=$50

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