Question

Mario transferred a balance of $6050 to a new credit card at the beginning of

the year. The card offered an introductory APR of 3.1% for the first 3 months
and a standard APR of 20.6% thereafter. If the card compounds interest
monthly, which of these expressions represents Mario's balance at the end of
the year? (Assume that Mario will make no payments or new purchases
during the year, and ignore any possible late payment fees.)

Answer 1

`6050(1+(0.031)/(12))^(3)(1+(0.206)/(12))^(9)`

Explanation:

p = $6050

The card offered an introductory APR of 3.1% for the first 3 months

r = 3.1% or 0.031

t = 3

n = 12

So, compound interest formula for this period is :

`6050(1+(0.031)/(12))^(3)`

And a standard APR of 20.6% thereafter,

r = 20.6% or 0.206

t = 9

n = 12

So, compound interest formula for this period is :

`6050(1+(0.206)/(12))^(9)`

Now as the p is common, we can re write the expressions as :

`6050(1+(0.031)/(12))^(3)(1+(0.206)/(12))^(9)`