document.write( "Question 970542: Kayla uses her credit card to purchase a new television for $487.89. She can pay off up to $175 per month. The card has an annual rate of 23.5% compounded monthly. How much will she pay in interest? \n" ); document.write( "
Algebra.Com's Answer #593382 by Theo(13342)\"\" \"About 
You can put this solution on YOUR website!
you can use the following online calculator to answer your question.\r
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\n" ); document.write( "\n" ); document.write( "http://www.arachnoid.com/lutusp/finance.html\r
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\n" ); document.write( "\n" ); document.write( "you would make the folowing entries:\r
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\n" ); document.write( "\n" ); document.write( "Present Value = 487.89
\n" ); document.write( "Future Value = 0
\n" ); document.write( "Number of Payments is left blank because you want to solve for that.
\n" ); document.write( "Payment Amount = -175.00
\n" ); document.write( "Interest Rate per period = 23.5% per year divided by 12 = 1.958333% per month.
\n" ); document.write( "Payment At is at End.\r
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\n" ); document.write( "\n" ); document.write( "click on the NP button and it will tell you the number of months required for the loan to be fully paid off.\r
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\n" ); document.write( "\n" ); document.write( "the calculator will show you that it will take 2.89 months for you to fully pay off the loan of $487.99 when you are paying it off at $175.00 at the end of each momth and the interest rate if 1.958333% per month.\r
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\n" ); document.write( "\n" ); document.write( "now that you know how long it takes for you to pay it off, you can determine what the interest amount is that you paid.\r
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\n" ); document.write( "\n" ); document.write( "multiply your payment of 175 per month by 2.89 months to get a total payment of $505.75.\r
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\n" ); document.write( "\n" ); document.write( "your loan was for $487.89.\r
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\n" ); document.write( "\n" ); document.write( "the difference is the amount of interest you paid.\r
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\n" ); document.write( "\n" ); document.write( "that will be $505.75 - $487.89 = $17.86.\\r
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\n" ); document.write( "\n" ); document.write( "you paid $17.86 in interest.\r
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\n" ); document.write( "\n" ); document.write( "17.86 / 487.89 is equal to roughly 3.7% of the purchase price.\r
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\n" ); document.write( "\n" ); document.write( "that's the total interest you paid on the loan.\r
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\n" ); document.write( "\n" ); document.write( "why so low?\r
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\n" ); document.write( "\n" ); document.write( "because you paid the loan off in less than 3 months.\r
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\n" ); document.write( "\n" ); document.write( "if you had taken 2 years to pay off the lona, you would have had to pay more interest.\r
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\n" ); document.write( "\n" ); document.write( "i'll do the calculations for you so you can see.\r
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\n" ); document.write( "\n" ); document.write( "Present Value is 487.89
\n" ); document.write( "Future Value is 0
\n" ); document.write( "Number of Payments is 24
\n" ); document.write( "Payment Amount is what you want to find.
\n" ); document.write( "Interest Rate per period = 1.958333%
\n" ); document.write( "Payment At End of month\r
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\n" ); document.write( "\n" ); document.write( "click on PMT and you will need to be paying 25.67 per month in order to completely pay off the loan in 24 months.\r
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\n" ); document.write( "\n" ); document.write( "how much interest would you have paid?\r
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\n" ); document.write( "\n" ); document.write( "24 * 25.67 = 616.08\r
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\n" ); document.write( "\n" ); document.write( "616.08 - 487.89 = 128.19\r
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\n" ); document.write( "\n" ); document.write( "128.19 / 487.89 = 26%.\r
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\n" ); document.write( "\n" ); document.write( "if you had paid the loan off in 24 months, you would have paid 128.19 in interest which was equivalent to 26% of the initial purchase price.\r
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\n" ); document.write( "\n" ); document.write( "the fact that you paid the loan off so quickly is why you were not charged a higher percentage of the initial purchase price.
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