Question 548403: Malik purchased a pair of roller blades that were originally priced at $250 for a sale price of $180. He charged the roller blades on his credit card and made the minimum monthly payment of $20. When he received his first statement, he read that the minimum finance charge for each month that there was a balance on the card would be $15. If Malik waited until he had the $250 cash in hand to pay for the roller blades, how much money would he save?
Answer by KMST(5328)   (Show Source):
You can put this solution on YOUR website! Poor Malik!
If he made a first payment of $20 shortly after the purchase, he would have a balance of $180-$20=$160, before they applied the first $15 finance charge, but he will see a balance of $180-$20+$15=$175 (with the finance charge) in that first statement.
Each month, his balance will change by -$20+$15=-$5, so it will take him, another 32 payments to reduce that $160 to $0. That month, he will pay the $20 balance to get a balance of zero, and hopefully see no more finance charges.
In all, paying the minimum $20 payment each month, Malik will make 33 such payments for a total of $660. If he saved $20 per month, he could have saved $180 in 9 months, or $260 in 13 months, and he would have saved a lot of money. He would probably have to pay the $250 regular price, and would have missed about a year of roller blading, but he would have saved $660-250=$410.
|
|
|
