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17 September, 10:52

Listed below are the balances and annual percentage rates for Jimmy's credit cards. If Jimmy makes the same payment each month to pay off his entire credit card debt in the next 12 months, how much will he have paid in interest in the 12 month period? (Hint, find out how much interest Jimmy pays to each card over the 12 months seperately, and then add them together.) Credit Card Current Balance APR A $563.00 16% B $2,525.00 21% C $972.00 19% a. $321.83 b. $370.75 c. $449.24 d. $730.80 c

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  1. 17 September, 11:05
    0
    Hi there

    We know that the formula of the present value of annuity ordinary is

    Pv=pmt [ (1 - (1+r/k) ^ (-kn)) : (r/k) ]

    Pv present value

    PMT monthly payment

    R interest rate

    K compounded monthly 12 because the payment is monthly

    N time

    What we need from the formula above to find the monthly payment

    So to find the monthly payment the formula

    PMT=pv:[ (1 - (1+r/k) ^ (-kn)) : (r/k) ]

    Another important things we need is how to find total payments and interest charge

    To find total payments

    Monthly payment*12

    And to find interest charge

    Total payments-present value

    Now let's find interest charge for each credit card

    Credit card A

    The monthly payment is

    PMT=563: ((1 - (1+0.16:12) ^ (

    -12)) : (0.16:12)) = 51.08

    Total payments

    51.08*12=612.96

    interest charge

    612.96-563=49.96

    Credit card b

    PMT=2,525: ((1 - (1+0.21:12) ^ (

    -12)) : (0.21:12)) = 235.11

    Total payments

    235.11*12=2,821.32

    interest charge

    2,821.32-2,525=296.32

    Credit card c

    PMT=972: ((1 - (1+0.19:12) ^ (

    -12)) : (0.19:12)) = 89.58

    Total payments

    89.58*12=1,074.96

    interest charge

    1,074.96-972=102.96

    So total interest charge for all credit cards is

    102.96+296.32+49.96

    =449.24 ... final answer

    It's c

    Good luck!
  2. 17 September, 14:00
    0
    It is C ...
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