Eudora transferred a balance of $6400 to a new credit card at the beginning

of the year. The card offered an introductory APR of 7.8% for the first 3

months and a standard APR of 26.5% thereafter. If the card compounds

interest monthly, what will Eudora's balance be at the end of the year?

(Assume that Eudora will make no payments or new purchases during the

year, and ignore any possible late payment fees.)

Question

Mathematics

Abbey

22 September, 04:16

Eudora transferred a balance of $6400 to a new credit card at the beginning

of the year. The card offered an introductory APR of 7.8% for the first 3

months and a standard APR of 26.5% thereafter. If the card compounds

interest monthly, what will Eudora's balance be at the end of the year?

(Assume that Eudora will make no payments or new purchases during the

year, and ignore any possible late payment fees.)

+2

Answers (2)

Know the Answer?

Jenna Gill · Answer 1

Answer: $66,504.50

Step-by-step explanation:

For the first 3 months, the interest is 7.6% per month. So, at the end of these 3 months, the balance is

M = 6400 (1+0.078) ³ = 6400. 1.078³ = 8017.45

For the last 9 months, the interest is 26.5% per month, So, at the end of these 9 months, the balance is

M = 8017.45 (1+0.265) ⁹ = 8017.45 (1.265) ⁹ = 66504.50

Kali Small · Answer 2

D. $7943.25