Mary and Joe Belinksy went out to dinner for Valentine‘s Day and paid for the meal...
Mary and Joe Belinksy went out to dinner for Valentine‘s Day and paid for the meal using a credit card that has an APR of 20 percent. If they make only minimum payments each month, and do not repay the $100 cost of the dinner until 12 months later, how much did the dinner actually cost them?
Homework Answers
Minimum Payments paid over 12 months = Interest Portion = Total Cost*APR = 100*20% = $20
Now, Assuming that full cost i.e. $100 is paid after 12 months,
Actual Cost of Dinner = Minimum Payments made+Actual Cost = 20+100 = $120
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