a $200 cash advance by using checks linked to to her credit card account.The bank charges a 2 % cash advance fee on the amount borrowed and offers no grace period on cah advances.Sidney paid the balance in full when the bill arrived.What was the cash advance fee? What was the intrest for 1month @ an 18% apr?What was the total amount paid?What if she had made the purchase with her credit card and paid the balance off promptly?
18% APR -How is this compounded?
Yearly, daily, quarterly, etc?
To determine the cash advance fee, interest for one month at an 18% APR, and the total amount paid, we can follow these steps:
1. Calculate the cash advance fee:
- The amount borrowed for the cash advance is $200.
- The cash advance fee is 2% of the amount borrowed.
- Therefore, the cash advance fee is 2% of $200, which is $4.
2. Calculate the interest for one month at an 18% APR:
- The Annual Percentage Rate (APR) is 18%.
- To calculate the monthly interest rate, divide the APR by 12 (months). So, 18%/12 = 1.5% per month.
- The amount borrowed for the cash advance is $200.
- Therefore, the interest for one month is 1.5% of $200, which is $3.
3. Calculate the total amount paid:
- The amount borrowed for the cash advance is $200.
- The cash advance fee is $4.
- The interest for one month is $3.
- When the bill arrived, Sidney paid the balance in full.
- Therefore, the total amount paid would be the sum of the amount borrowed, the cash advance fee, and the interest: $200 + $4 + $3 = $207.
If Sidney had made the purchase with her credit card and paid the balance off promptly, the cash advance fee and interest would not apply. She would only have to pay the $200 for the purchase made using the credit card.