Timothy Carter went out to eat with his girlfriend at a fancy restaurant. When he tried to pay the bill with his Mastercard credit card, he was told that the restaurant accepted only cash or American Express. His waiter suggested that he use the ATM across the street to withdraw cash using his credit card. Tim did as suggested and didn't pay attention to any fees until he received his credit card statement one month later. He was shocked to see the total fees (3% cash advance), and his APR was increased to 21%. Given the cost of the meal ($125) plus the associated fees, how much did his meal cost him?

Question

Quizplus · Accepted Answer

To calculate the total cost of the meal, we need to add the cost of the meal ($125) to the cash advance fee (3% of $125 = $3.75). So the total cost is $128.75.

But we also need to consider the increased APR of 21%. Assuming that Tim took a year to pay off the credit card balance, the interest on the cash advance would be approximately $2.19 ($128.75 x 21% / 365).

Therefore, the total cost of the meal plus fees and interest is $130.94 (rounded to the nearest cent).

So the correct answer is D.

Timothy Carter Went Out to Eat with His Girlfriend at a Fancy