Question

today Ned got a new credit card, and he made a purchase of $1100. the card offers an introductory APR of 0% for the first 3 months and a standard APR of 34.3% thereafter. if the card compounds interest monthly, how much money will the introductory APR save Ned in interest over the first 3 months? (Assume that ned will make no payments or additional purchases during the first 3 months, and ignore any possible late payment fees)... a) $442.65 b)$1197.05 c)$97.05 d)$1542.65

Answer 1

A= P(1+r/n)^nt

P = principal amount (the initial amount you borrow or deposit)

r = annual rate of interest (as a decimal)

t = number of years the amount is deposited or borrowed for.

A = amount of money accumulated after n years, including interest.

n = number of times the interest is compounded per year

A= 1100(1+0.343/12)^12/4

A = 1197.04

Amount saved = 1197.04 - 1100 = $ 97.04