Determine the cost of credit for a 2-year, $5,000 credit card loan with a monthly payment of $257.67, which corresponds to a fixed compound interest rate of 21.3% compounded monthly. Round the answer to two decimal places as needed. (1 point)
To determine the cost of credit for a 2-year, $5,000 credit card loan with a monthly payment of $257.67, we first need to calculate the total amount paid over the 2-year period.
The monthly payment is $257.67, and there are 12 months in a year, so the total number of payments over 2 years is 12 * 2 = 24 payments.
The total amount paid over the 2-year period is 24 * $257.67 = $6184.08.
To calculate the cost of credit, we subtract the original loan amount from the total amount paid:
Cost of credit = Total amount paid - Loan amount
= $6184.08 - $5000
= $1184.08
Therefore, the cost of credit for the 2-year, $5,000 credit card loan is $1184.08.