Question

Dustin bought a $2000 computer with a credit card.The minimum payment each month is $35.Each month 1% of the unpaid balance is added to the amount he owes.
If Dustin pays only $35 the first month, what will he owe the second month?
If Dustin makes the minimum payment, what will he owe the third month?

Answer 1

Answer:

Dustin bought a $2,000 computer with a credit card, and paid the $35 minimum payment in the first month, thus leaving an unpaid balance of $1,965 (2,000 - 35). As each month 1% of the unpaid balance is added to the owed amount, next month he will have to pay $1,984.65 (1,965 + 1,965/100).

If also the following month he paid the minimum $35 payment, he would leave an unpaid balance of $1,949.65 (1,984.65 - 35). As a result, the third month he will have to pay $1,969.14 (1,949.65 + 1,949.65/100).

Answer 2

2nd month: (2000 - 35) 1.01 = 1984.65

3rd month: (1984.65 - 35) 1.01 = 1969.15