Suppose you purchase a new wardrobe for $1000 with a credit card. You decide to pay for your new wardrobe by making the minimum monthly payment each month. You do not charge anything else to this credit card until you have the wardrobe paid off. Your credit card company determines your minimum monthly payment by adding all new interest to 1% of the outstanding principal. The credit card company charges an annual percentage rate of 18%. Go to an Internet credit card payment calculator web site such as www.bankrate.com to answer the following questions.
(a) How long will it take you to pay off the entire credit card debt if you make the minimum monthly payments?
(b) How much interest will you pay?
(c) Adding the interest paid to the cash price, determine the total cost of your wardrobe.
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