Applying What You’ve Learned Comparing financing methods. Mayesha purchased a large-screen TV for $ 1000 and can pay it off in 10 months with an add-on interest loan at an annual rate of 10.5 % , or she can use her credit card that has an annual rate of 18 % . If she uses her credit card, she will pay $ 100 per month (beginning next month) plus the finance charges for the month. Assume that Mayesha’s credit card company is using the unpaid balance method to compute her finance charges and that she is making no other transactions on her credit card. Which option will have the smaller total finance charges on her loan?
Applying What You’ve Learned Comparing financing methods. Mayesha purchased a large-screen TV for $ 1000 and can pay it off in 10 months with an add-on interest loan at an annual rate of 10.5 % , or she can use her credit card that has an annual rate of 18 % . If she uses her credit card, she will pay $ 100 per month (beginning next month) plus the finance charges for the month. Assume that Mayesha’s credit card company is using the unpaid balance method to compute her finance charges and that she is making no other transactions on her credit card. Which option will have the smaller total finance charges on her loan?
Solution Summary: The author explains how Mayesha can pay off her TV in 10 months with an add-on interest loan at an annual rate of 10.5%.
Comparing financing methods. Mayesha purchased a large-screen TV for
$
1000
and can pay it off in
10
months with an add-on interest loan at an annual rate of
10.5
%
, or she can use her credit card that has an annual rate of
18
%
. If she uses her credit card, she will pay
$
100
per month (beginning next month) plus the finance charges for the month. Assume that Mayesha’s credit card company is using the unpaid balance method to compute her finance charges and that she is making no other transactions on her credit card. Which option will have the smaller total finance charges on her loan?
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