Answer:
Option B ,$133.92 is correct
Step-by-step explanation:
By consolidating both balances in Card B,APR of 12% would apply to funds in card A as well
Let us approach the question by solving for monthly payment of Card A using 12% APR as follows while making use of excel pmt formula:
=pmt(rate,nper,-pv,fv)
rate is the monthly rate on the card which is 12%/12=1%
nper is the number of months of payment which is 12 months * 4 years=48
pv is the current balance in the card which is $1,389.47
fv is the total amount of monthly repayment which is taken as zero
=pmt(1%,48,-1389.47,0)=$ 36.59
Using 16% monthly payment is $39.38 which is given already
Total monthly payments for 16%=$39.38*48=$1890.24
Total monthly payments for 12% APR=$36.59*48=$1756.32
savings in total repayments=savings in interest=$1890.24
-$1756.32
=$133.92
