Using an online calculator, determine the total cost, fixed monthly payment, and the total interest paid when repaying a credit card loan of $3,500 with a 21% interest rate compounded monthly over a 24-month term. Round the answer to the nearest dollar. (2 points)
To the nearest dollar, the total cost of repaying the loan is $
. The fixed
monthly payment amount is $
. The total amount of interest paid is $
To find the total cost of repaying the loan, we need to calculate the monthly payment amount and multiply it by the number of months.
The formula to calculate the monthly payment amount for a loan is:
M = P * (r * (1 + r)^n) / ((1 + r)^n - 1)
Where:
M = Monthly payment
P = Principal loan amount
r = Interest rate per period (monthly interest rate in this case)
n = Total number of periods
Let's calculate the monthly payment amount:
P = $3,500
r = 21%/12 = 0.0175 (monthly interest rate)
n = 24 (24 months)
M = 3500 * (0.0175 * (1 + 0.0175)^24) / ((1 + 0.0175)^24 - 1)
Using an online calculator or a spreadsheet calculator, the monthly payment comes out to be approximately $186.
Now, let's calculate the total cost:
Total Cost = Monthly payment amount * Total number of months
Total Cost = $186 * 24
Using an online calculator or a spreadsheet calculator, the total cost comes out to be approximately $4,464.
The fixed monthly payment amount is $186.
To calculate the total interest paid, we subtract the principal loan amount from the total cost:
Total Interest Paid = Total Cost - Principal Loan Amount
Total Interest Paid = $4,464 - $3,500
Using an online calculator or a spreadsheet calculator, the total interest paid comes out to be approximately $964.
To the nearest dollar, the total cost of repaying the loan is $4,464. The fixed monthly payment amount is $186. The total amount of interest paid is $964.