You have a $1,550 balance on your 15% credit card. You have lost your job and be

Question

You have a $1,550 balance on your 15% credit card. You have lost your job and been unemployed for 6 months. You have been unable to make any payments on your balance. However, you received a tax refund and want to pay off the credit card.

a. How much will you owe on the credit card if you have not made a payment for 6 months? (Round your answers to the nearest cent.)

b. How much interest will have accrued? (Round your answer to the nearest cent.)

Interest accrued            $

c. What will be the effective rate of interest after the 6 months? (Round your answer to the nearest hundredth percent.)

Effective rate of interest             %

Explanation / Answer

Answer: a. month oustanding amount $ (a) rate interest $ (b) total (a)+(b) $ 1 1550 15% 19.375 1569.38 2 1569.38 15% 19.6171875 1588.99 3 1588.99 15% 19.862375 1608.85 4 1608.85 15% 20.110625 1628.96 5 1628.96 15% 20.362 1649.32 6 1649.32 15% 20.6165 1669.94 Total 119.94 b. interest accrued $119.94 c. effective rate of interest 15.48% ($119.94/1550*12/6)

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