Question 14 • 26-27 Ignite Technical Math-Financial Math - MA2007
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?
Answer
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.