Brooklyn opened a store credit card to purchase a sofa for $849. She put the entire purchase on the credit card. Her APR is 19.99% and the minimum payment is 5%. Assuming she makes only minimum payments, what is the remaining balance on her card after 3 months?
849 x (0.1999 / 12) = $14.14 interest
849 + 14.14 = 863.14 balance before payment
863.14 x 0.05 = 43.16 Payment
863.14 - 43.16 = 819.98 balance after payment
2nd month
819.98 x (0.1999 / 12) = $13.66 interest
819.98 + 13.66 = 833.64 balance before payment
833.64 x 0.05 = 41.68 Payment
833.64 - 41.68 = 791.96 balance after payment
3rd month
791.96 x (0.1999 / 12) = $13.19 interest
791.96 + 13.19 = 805.15 balance before payment
805.15 x 0.05 = 40.26 Payment
805.15 - 40.26 = 764.89 balance after payment
My answer is $764.89
Not to be rude but this is not correct
Your calculation is correct. The remaining balance on Brooklyn's credit card after 3 months of making only minimum payments is $764.89.
Your answer of $764.89 is correct. To calculate the remaining balance on Brooklyn's credit card after 3 months, you need to follow these steps:
1. Calculate the interest for each month:
- Multiply the balance at the beginning of each month by the monthly interest rate.
- For example, for the first month: $849 x (0.1999 / 12) = $14.14 in interest.
2. Add the interest to the beginning balance to get the balance before the payment:
- For the first month: $849 + $14.14 = $863.14.
3. Calculate the minimum payment for each month:
- Multiply the balance before the payment by the minimum payment percentage.
- For the first month: $863.14 x 0.05 = $43.16.
4. Subtract the minimum payment from the balance before the payment to get the balance after the payment:
- For the first month: $863.14 - $43.16 = $819.98.
5. Repeat these steps for the second and third months:
- Second month:
- Calculate interest: $819.98 x (0.1999 / 12) = $13.66.
- Balance before payment: $819.98 + $13.66 = $833.64.
- Minimum payment: $833.64 x 0.05 = $41.68.
- Balance after payment: $833.64 - $41.68 = $791.96.
- Third month:
- Calculate interest: $791.96 x (0.1999 / 12) = $13.19.
- Balance before payment: $791.96 + $13.19 = $805.15.
- Minimum payment: $805.15 x 0.05 = $40.26.
- Balance after payment: $805.15 - $40.26 = $764.89.
So, the remaining balance on Brooklyn's credit card after 3 months of making only minimum payments is $764.89.