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.
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 will add the principal amount ($3,500) to the total amount of interest paid.
Total cost = principal amount + total interest paid
To find the monthly payment amount, we will use an online calculator or the formula:
Monthly payment = P × (r × (1 + r)^n) / ((1 + r)^n - 1)
Where:
P = principal amount
r = monthly interest rate
n = number of monthly payments
In this case, the principal amount (P) is $3,500, the monthly interest rate (r) is 21% divided by 12 (since it's compounded monthly), and the number of monthly payments (n) is 24.
To find the total interest paid, we will multiply the monthly payment amount by the number of monthly payments and subtract the principal amount.
Total interest paid = (monthly payment × number of monthly payments) - principal amount
Using these calculations, the answers to the nearest dollar will be:
Total cost = $3,500 + total interest paid
Monthly payment = calculated using the formula or an online calculator
Total interest paid = (monthly payment × number of monthly payments) - principal amount