Question

Wilson has a balance of $890 on a credit card with an apr of 18.7%, compounded monthly. about how much will he save in interest over the course of a year if he transfers his balance to a credit card with an apr of 12.5%, compounded monthly? (assume that wilson will make no payments or new purchases during the year, and ignore any possible late-payment fees.)
a.$117.85
b.$181.46
c.$299.31
d.$63.61

Answer 1

Answer:

Option d.$63.61

Step-by-step explanation:

We will find the compound interests in both scenarios and then subtract them to find the difference.

Case 1:

p = 890

r = 18.7% or 0.187

n = 12

t = 1

Compound interest formula is :

$A=p(1+\frac{r}{n})^{nt}$

Putting the above values in formula we get,

$A=890(1+\frac{0.187}{12})^{12}$

= $ 1071.38

Case 2:

p = 890

r = 12.5% or 0.125

n = 12

t = 1

Putting the above values in formula we get,

$A=890(1+\frac{0.125}{12})^{12}$

= $1007.83

Now, the difference between both values is = $1071.38-1007.83$

=$63.55 this is closest to option D.

Therefore, option D is the answer.

Answer 2

890×(1+0.187÷12)^(12)−890×(1+0.125÷12)^(12)=63.61....answer