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 calculate the total cost of repaying the loan, we need to add the principal amount ($3,500) to the total interest paid. The formula to calculate the total interest paid is:
Total Interest = (Principal Amount * Interest Rate * Time Period) / (1 - (1 + Interest Rate) ^ -Time Period)
Plugging in the values, we get:
Total Interest = (3500 * 0.21 * 2) / (1 - (1 + 0.21) ^ -2)
Total Interest ≈ $741.58
Now, to calculate the total cost, we add the principal amount to the total interest paid:
Total Cost = Principal Amount + Total Interest
Total Cost ≈ $3500 + $741.58
Total Cost ≈ $4,241
To calculate the fixed monthly payment, we use the equation:
Fixed Monthly Payment = Total Cost / Time Period
Fixed Monthly Payment ≈ $4,241 / 24
Fixed Monthly Payment ≈ $176.71
Therefore, the total cost of repaying the loan is approximately $4,241, the fixed monthly payment amount is approximately $176.71, and the total amount of interest paid is approximately $741.