Question

3 parts!!! Suppose that on January 1 you have a balance of $4500 on a credit card whose APR is 12%, which you want to pay off in 1 year. Assume that you make no additional charges to the card after January 1.a. Calculate your monthly payments.b. When the card is paid off, how much will you have paid since January 1?c. What percentage of your total payment from part(b) is interest?Part A: The monthly payment is ?(Do not round until the final answer. Then round to the nearest cont as needed.)

Answer 1

Given,

P=$4500

r=12%

For 1 month the rate is 12/12%=1%

So interest for one month is

`I=(4500*1*1)/(100)=45`

a. The monthly payment is:

`\begin{gathered} A=(4500*0.01*(1+0.01)^(12))/((1+0.01)^(12)-1) \\ \Rightarrow A=(50.70)/(0.12) \\ \Rightarrow A=422.5 \end{gathered}`

The monthly payment is $422.5

b. Total payment for a year is:

A=4500+(12x45)=$5040

Total amount paid since January is $5040

c. The percentage of interest is:

`(45*12)/(5040)*100\%=10.71`

The percentage interest is 10.71%