Using an online loan calculator, determine the total cost of repaying a $750 credit card loan with a 17.99% interest rate compounded monthly and a fixed monthly payment over a period of 9 months. Round the answer to the nearest dollar.(1 point)
To determine the total cost of repaying the credit card loan, we need to calculate the monthly payment and multiply it by the number of months.
First, let's calculate the monthly interest rate:
Monthly interest rate = (annual interest rate)/(number of compounding periods per year)
Monthly interest rate = 17.99%/12 = 0.0149925
Next, let's determine the monthly payment. We can use an online loan calculator or the loan payment formula to find the monthly payment amount. Assuming the $750 loan is to be repaid in 9 months, the formula is:
Monthly payment = (Principal * Monthly interest rate) / (1 - (1 + Monthly interest rate)^(-Number of payments))
Monthly payment = (750 * 0.0149925) / (1 - (1 + 0.0149925)^(-9))
Monthly payment = 13.92
Now, let's calculate the total cost of repaying the loan:
Total cost = Monthly payment * Number of payments
Total cost = 13.92 * 9
Total cost = 125.28
Rounded to the nearest dollar, the total cost of repaying the $750 credit card loan is $125.
wrong
I apologize for the incorrect response. Let's recalculate the total cost of repaying the credit card loan.
To compute the monthly payment, we can use the following formula:
Monthly payment = (P * r * (1 + r)^n) / ((1 + r)^n - 1)
Where:
P = Loan amount = $750
r = Monthly interest rate = 17.99% / 100 / 12 = 0.0149925
n = Number of payments = 9
Substituting the values into the formula:
Monthly payment = (750 * 0.0149925 * (1 + 0.0149925)^9) / ((1 + 0.0149925)^9 - 1)
Monthly payment ≈ $87.03
Next, let's calculate the total cost of repaying the loan:
Total cost = Monthly payment * Number of payments
Total cost = $87.03 * 9
Total cost ≈ $783.27
Rounded to the nearest dollar, the total cost of repaying the $750 credit card loan is $783.