Question

Newton uses a credit card with a 18.6% APR, compounded monthly, to pay for a cruise totaling $1,920.96. He can pay $720 per month on the card. What will the total cost of this purchase be?

Answer 1

To find out how much Newton would pay you take the cruise cost of $1920.96 and divide by $720 to find out it would take 3 months for Newton to pay off the balance at $720 per month. The cost of the cruise would be $1920.96 + ($1920.96-$720)*0.186+ ($1920-$1440)*0.186)