Hi,

I have a question on my assignment which I have answered below. Can someone please tell me if this has been done correctly.

The question is outline below along with my answer:

Simon can finance his purchase of a £1500 virtual reality (VR) headset:

A.He can buy it on a credit card, which charges 25% APR on balances that are not paid off within 1 month. This will be the only purchase made with the card, which has a zero balance at the moment. He will pay off £750 within the interest-free period (using the money in his current account that pays no interest), and the rest of the balance in 12 equal monthly instalments.- Using the Saving and borrowing calculator, calculate the total amount of interest that Simon will be charged over the lifetime of the loan.

MyMy answer:

In option A, Simon will pay less interest. Even though he will be borrowing the full £1,500 on his credit card, he will repay half of the money £750 within the interest free period (1 month), which means he will only pay the remaining £750 at an interest rate of 25% APR over 12 months.

The total interest he will pay is £94.56