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Question 881743: 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
Answer by Theo(13342)   (Show Source):
You can put this solution on YOUR website! your answer is $449.24
i used a financial calculator, but you could have solved it using the payment for a present value formula as well.
the procedure is:
number of time periods = 12.
interest rate per time period = annual interest rate / 12
present value = current balance of the loan.
solve for monthly payment.
multiply monthly payment by 12.
subtract original balance from the sum of the monthly payments.
the difference is the interest paid over the 12 months.
for example:
credit card A haqs a current balance of $563.00
the annual interest rate is .16 (16% / 100)
the monthly interest rate is .16/12 = .01333333333
use the formula or the calculator to find the monthly payment which turns out to be 51.08147297
multiply this by 12 to get 612.9776757
subtract 563 from this to get 49.9776757
that's the interest paid on the first loan.
similarly, the interest paid on the second loan is 296.347345 and the interest paid on the third loan is 102.9143284.
add these three together and you get 449.2393491
the formula for calculating the payment form a present amount can be found at the following link:
http://www.financeformulas.net/Annuity_Payment_Formula.html
the number of time periods is 12.
the rate per time period is the annual rate divided by 12.
the annual rate is the apr divided by 100.
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