Question

Robby is considering taking out a cash advance on his credit card to purchase a new television. His credit card offers cash advances up to $500. 00 at an interest rate of 28%. If the television costs $350. 00 and Robby plans to pay the balance of in 6 months, how much extra will he pay in interest to purchase the television? a. $29. 14 b. $63. 18 c. $174. 48 d. $379. 8.

Answer 1

A credit card is a payment card allocated by a bank enabling the holder to buy goods or services or accrued on the card.  It facilitates consumer and retail business trades, including investments and currency advances.

He needs to pay $29.14 extra in interest to purchase a television.

How to calculate the extra amount?

Given,

• Credit card advances up to = $500
• Interest rate (i) = 28%
• Cost of the television (P) = $350. 00

Now calculate the monthly payment:

$\begin{aligned}\text{Monthly payment}(m)&= \dfrac{P \times i}{ 1-(1+i)-n}\\\\ m &= 350 \times \dfrac{\dfrac{0.28}{12}}{1-(1+\dfrac{0.28}{12})-6}\\\\&= 63.188\end{aligned}$

If he pays $63.188 per month then for six months he will pay,

$\begin{aligned}&= \ 63.188 \times 6\\\\&= \ 379.132\end{aligned}$

The cost of the TV was $350 hence, the extra amount he paid,

$\begin{aligned}&= \ 379.132 - \ 350\\\\&=\ 29.14\end{aligned}$

Therefore, option a is correct.

Learn more about credit cards here:

https://brainly.com/question/900758