You receive a credit card application from Gotham National Bank offering an intr

Question

You receive a credit card application from Gotham National Bank offering an introductory rate of 0.5 percent per year, compounded monthly for the first six months, increasing thereafter to 17.6 percent compounded monthly. Assume you transfer the $6,600 balance from your existing credit card and make no subsequent payments.

How much interest will you owe at the end of the first year? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Please help and show steps if possible

You receive a credit card application from Gotham National Bank offering an introductory rate of 0.5 percent per year, compounded monthly for the first six months, increasing thereafter to 17.6 percent compounded monthly. Assume you transfer the $6,600 balance from your existing credit card and make no subsequent payments.

How much interest will you owe at the end of the first year? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Please help and show steps if possible

Explanation / Answer

Per month interest rate for first six month = 0.5%/12

Per month interest rate for next six month = 17.6%/12

Future value of debt = 6,600*(1+ 0.5%/12)^6*(1+17.6%/12)^6 =$7220.54

interest will you owe at the end of the first year = 7220.54-6600=$620.54

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