Question

Due to poor spending habits, Ricky has accumulated $5,000 in credit card debt. He has missed several payments and now the annual interest rate on the card is 16.75 percent! If he pays $200 per month on the card, in total, how much interest expense does Ricky pay to the credit card company?

$847.50

$1,192.00

$6,192.00

$2,118.75

Answer 1

	CALCULATION OF TOTAL INTEREST CHARGED
	Months	Opening Balance of loan amount	Interest @ 16.75% /12	Installment	Closing Balance of the mont
	1	$5,000.00	69.79	200.00	4,869.79
	2	$4,869.79	67.97	200.00	4,737.77
	3	$4,737.77	66.13	200.00	4,603.90
	4	$4,603.90	64.26	200.00	4,468.16
	5	$4,468.16	62.37	200.00	4,330.53
	6	$4,330.53	60.45	200.00	4,190.97
	7	$4,190.97	58.50	200.00	4,049.47
	8	$4,049.47	56.52	200.00	3,906.00
	9	$3,906.00	54.52	200.00	3,760.52
	10	$3,760.52	52.49	200.00	3,613.01
	11	$3,613.01	50.43	200.00	3,463.44
	12	$3,463.44	48.34	200.00	3,311.79
	13	$3,311.79	46.23	200.00	3,158.01
	14	$3,158.01	44.08	200.00	3,002.09
	15	$3,002.09	41.90	200.00	2,844.00
	16	$2,844.00	39.70	200.00	2,683.69
	17	$2,683.69	37.46	200.00	2,521.15
	18	$2,521.15	35.19	200.00	2,356.35
	19	$2,356.35	32.89	200.00	2,189.24
	20	$2,189.24	30.56	200.00	2,019.79
	21	$2,019.79	28.19	200.00	1,847.99
	22	$1,847.99	25.79	200.00	1,673.78
	23	$1,673.78	23.36	200.00	1,497.15
	24	$1,497.15	20.90	200.00	1,318.04
	25	$1,318.04	18.40	200.00	1,136.44
	26	$1,136.44	15.86	200.00	952.30
	27	$952.30	13.29	200.00	765.60
	28	$765.60	10.69	200.00	576.28
	29	$576.28	8.04	200.00	384.33
	30	$384.33	5.36	200.00	189.69
	31	$189.69	2.65	192.34	-0.00
		Total	1,192
		Total interest charged = $ 1,192
	Answer = Option 2 = $ 1,192