Question

6. Andrew has a balance of $2,500 on his Amazon credit card. The interest rate is 24% per year and he pays $200 on time each month. He likes the deals on Amazon and charges the additional amounts shown below each month. (a) What is the monthly rate of interest? (b) Complete the table (to the nearest $1) to see what happens to the balance over time. Month Balance Interest Payment New New Number Charges Balance $2500 $200 $250 1 2 $200 $400 3 $200 $300

Answer 1

Balance (P) = 2500 Interest rate (R) = 24%. payment = 200 The monthly rate of interest is RI 24% 12 그 2 % For first month. I = PRIT [:P P=2500, R, = 27., T=1 = 2500, 2.1 loo 2 50 ni interest = 50 New Balance = 2500+50+200 +250 = 3000 For second month: Balance (P) = 3000 , Ri = 2%, T=1, -, I = PRIT 3000 . 2 10o ·1 2 Go an interest = Go New Balance = 3000+ 60+ 200+400 = 3660

For third month: Balance (P) = 3660 R = 2%, T=1 :. I=PRIT 2 3660.2 To 0.2011 2 73.2 interest = 73:2 273 (to the nearest $1) New Balance = 3660+73+200-300 = 4233 Month New Balance Interest | Payment New Charges Number Balance $2500 $ 50 $250 1 $200 3000 2 $3000 $ Go $ 200 $400 36 Go 3 $3660 $ 73 7 $200 $ 300 4233