the Derve r tdeded to iv the Nfe of lusury and had now, pay leter attitude. He i

Question

the Derve r tdeded to iv the Nfe of lusury and had now, pay leter attitude. He indulged in rice direnersother he ac dinners out, season $39,700 in credit card debt during this time. ShortY esult they after accruing this debt Shawn alse missed a payment to his Viso the interest rate (APR) to 30 ) If Showe wonts payments be ef Poymente beo it te pey eff the Wisa card in 10 years, what will his menthiy b) How much mony will lost payment. at pyml Shaon heve paid in total to Vise after he makes his c) Hew much interest did Shawn poy to Visa cfter his last payment was node?

Explanation / Answer

So P= 39,700; Monthly interest = r = 0.3/12 = 0.025 = 2.5% per month;
Number of months = n = 10*12 = 120
Thus, EMI = P*r* (1+r)n / [(1+r)n-1 ]
= 39700 * 0.025* (1.025)120 / [ (1.025)120-1 ]
= 1046.566 ~= 1047$
Hence, his monthly installment would be 1047$ ;

b) In total to VISA, he would have made in 10 years = 10*12* 1047 = 1,25,640$

Thus, by the time he makes his last payment, Shawn would have paid 1,25,640$ to Visa

c) Of the total amount paid, it will be a sum of total interest and total principle
total interest + total principle = 1,25,640
total interest + 39700 = 1,25,640
Total interest = 1,25,640 - 39700 = 85,940$

Thus, total interest paid by Shawn to Visa after last payment was made is 85,940$

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