Question

Timothy Carter went out to eat with his girlfriend at a fancy restaurant. When he tried to pay the bill with his Mastercard credit card, he was told that the restaurant accepted only cash or American Express. His waiter suggested that he use the ATM across the street to withdraw cash using his credit card. Tim did as suggested and didn't pay attention to any fees until he received his credit card statement one month later. He was shocked to see the total fees (2.0% cash advance), and his APR was increased to 21.5%. Given the cost of the meal ($220) plus the associated fees, how much did his meal cost him?

Answer 1

Answer:Total cost of the meal = $220 + $2.20 + $3.94 = $26.14

Explanation:

Cost of the meal = $220

total transaction fees = $220 x 2/100 = 2.20

APR cost = $220 x 0.215/12months = $3.941666667.

Timothy paid $220 for the meal and also incurred cost of  $2.2 in fees and $3.94 resulting from the increase in the Annual Percentage Rate which increases his monthly Percentage rate

Total cost of the meal = $220 + $2.20 + $3.94 = $226.14