Problem

A credit card for college students advertises an annual percentage rate (APR) of 9.9%, wit...

A credit card for college students advertises an annual percentage rate (APR) of 9.9%, with finance charges calculated using simple interest on the monthly balance. The minimum payment on the credit card is 3% of the outstanding balance or $10, whichever is greater. Now suppose that your credit card balance is $500 on January 1.2001, and that you make only the minimum payment on the first of each month thereafter, it you make no further purchases on the card, when will you pay off the credit card? How much interest will you have paid over that time period? What continuous annual compound rate of interest will you have paid on this debt?

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Solutions For Problems in Chapter 4.1