Suppose James has a credit card with a balance of 4289. Each month the credit card company charges 5% interest. If James pays off any new purchases that he makes each month without paying off the old balance or its interest, what will be the balance on his credit card one year from now?

4076.56

Step-by-step explanation:

First we need to calculate the James monthly charges on his balance of 4289.

Using the simple interest formula;

Simple Interest = Principal * Rate * Time/100

Principal = 4289

Rate = 5%

Time = 1 month = 1/12 year

Simple interest = 4289*5*1/12*100

Simple interest = 21,445/1200

Simple interest = 17.87

If monthly charge is 17.87, yearly charge will be 12 * 17.87 = 214.44

The balance on his credit card one year from now = Principal - Interest

= 4289 - 214.44

= 4076.56

The balance on his credit card one year from now will be 4076.56