You have an unpaid balance of $100 on a credit card and plan to pay off the balance in 12 months. Your credit card company charges you 9% interest per year. You transfer the balance to a card that charges only 7% per year and plan to pay off the balance in 6 months. Use the table in Figure 25.1 to calculate the difference in the total charge for interest.
You have an unpaid balance of $100 on a credit card and plan to pay off the balance in 12 months. Your credit card company charges you 9% interest per year. You transfer the balance to a card that charges only 7% per year and plan to pay off the balance in 6 months. Use the table in Figure 25.1 to calculate the difference in the total charge for interest.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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You have an unpaid balance of $100 on a credit card and plan to pay off the balance in 12 months. Your credit card company charges you 9% interest per year. You transfer the balance to a card that charges only
7% per year and plan to pay off the balance in 6 months. Use the table in Figure 25.1 to calculate the difference in the total charge for interest.
Transcribed Image Text:Figure 25.1- Annual Percentage Rate for Monthly Payments
Finance Charge per $100 Borrowed at Various Interest Rates
Number of Monthly
7.0%
7.5%
8.0%
8.5%
9.0%
Payments
6
$2.05
$2.20
$2.35
$2.49
$2.64
12
$3.83
$4.11
$4.39
$4.66
$4.94
18
$5.63
$6.04
$6.45
$6.86
$7.28
24
$7.45
$8.00
$8.55
$9.09
$9.64
30
$9.30
$9.98
$10.66
$11.35
$12.04
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