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    nargis123's Avatar
    nargis123 Posts: 28, Reputation: 1
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    #1

    Dec 29, 2016, 12:19 PM
    APR - Interest on an item
    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.

    My
    My 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
    ebaines's Avatar
    ebaines Posts: 12,131, Reputation: 1307
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    #2

    Jan 3, 2017, 01:01 PM
    I get a different answer. What do you calculate as the monthly payment?

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