Business
mzmbelle
20

Paul is going to buy a collectible vintage painting from a local art gallery. The painting is priced at $600 in the gallery. The gallery owner does accept credit cards but prefers cash. In fact, he offers to give Paul a 5% discount if he can pay in cash. Paul doesn't have any cash but can get a cash advance on his credit card. His credit card has an APR of 16% on credit purchases and a 32% APR on cash advances. Assuming Paul wants to pay the painting off over 12 months, which of the following is true? a.Paul will pay a total of $696, over 12 months, if he purchases the painting with his credit card. b.Paul will pay a total of $653.28, over 12 months, if he purchases the painting with his credit card. c.Paul will pay a total of $782.40, over 12 months, if he purchases the painting with a cash advance for discounted purchase price. d.Paul will pay a total of $708.96, over 12 months, if he purchases the painting with a cash advance for discounted purchase price.

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(1) Answers
Miraclehug

After a 5% discount, Paul needs a $570 cash advance. So,after 12 months, Paul will owe $152.40 in interest, for a total of $782.40. Hence, c.Paul will pay a total of $782.40, over 12 months, if he purchases the painting with a cash advance for discounted purchase price.TRUE

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