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30 May, 19:31

Jill has a balance of $5,000 on one credit card with an annual interest rate of 10%. To pay of the $5,000 in three years, Jill will have to make a minimum payment of $161.34 per month. On a second credit card, Jill has a balance of $5,000 with an annual interest rate of 5%. To pay off the $5,000 in three years, Jill will have to make a minimum payment of $149.85 per month. How much more does Jill have to pay when the interest rate changes from 5% to 10% on the $5,000 balance?

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  1. 30 May, 21:48
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    Jill has to pay US$ 413.64 in addition when the interest rate changes from 5% to 10% on the US$ 5,000 balance

    Step-by-step explanation:

    1. Let's review the information given to us to answer the question correctly:

    Minimum monthly payment Jill have to make to pay the balance of US$ 5,000 with an annual interest rate of 10% = US$ 161.34

    Minimum monthly payment Jill have to make to pay the balance of US$ 5,000 with an annual interest rate of 5% = US$ 149.85

    Time it takes pay totally the US$ 5,000 on both credit cards = 3 years

    2. How much more does Jill have to pay when the interest rate changes from 5% to 10% on the $5,000 balance?

    To find the difference between the two credit cards monthly payments, we make this calculation:

    Difference = Minimum monthly payment Jill have to make to pay the balance of US$ 5,000 with an annual interest rate of 10% - Minimum monthly payment Jill have to make to pay the balance of US$ 5,000 with an annual interest rate of 5%

    Difference = 161.34 - 149.85

    Difference = US$ 11.49 per month

    Now, for calculating how much more Jill has to pay when the interest rate changes from 5% to 10% on the US$ 5,000 balance, we use this multiplication:

    Monthly difference * 3 years = monthly difference * 36 months

    = 11.49 * 36 = 413.64

    Jill has to pay US$ 413.64 in addition when the interest rate changes from 5% to 10% on the US$ 5,000 balance
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