You have a $1,450 balance on your 12% credit card. You have lost your job and be

Question

You have a $1,450 balance on your 12% credit card. You have lost your job and been unemployed for 6 months. You have been unable to make any payments on your balance. However, you received a tax refund and want to pay off the credit card a How much will you owe on the credit card if you have not made a payment for 6 months? (Round your answers to the nearest cent.) , princi 1 month 2 months 3 months 4 months 5 months 6 months b. How much interest will have accrued? (Round your answer to the nearest cent.) c. What will be the effective rate of interest after the 6 months? (Round your answer to the nearest hundredth percent.) Effective rate of interest

Explanation / Answer

a)

b)

interest = 1539.20 - 1450 = 89.2

c)

effective rate = 89.2 /1450 *12 /6

= 0.12303

= 12.303%

months amount owed principal 1 1464.5 1450 2 1479.145 1464.5 3 1493.93645 1479.145 4 1508.875815 1493.936 5 1523.964573 1508.876 6 1539.204218 1523.965

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