Question

You have $1500 in investment. You make 8.5% interest a year on the investment. After a year, you owe $1600 on your credit card, and you pay 19% interest a year on this credit card. Calculate the total amount you owe after a year, taking into account both the investment and credit card.

Answer 1

After one year, the total amount owed, when considering an investment with 8.5% interest and credit card debt at 19% interest, would be $1776.50. This is calculated by subtracting the interest earned from the investment from the total interest accrued on the credit card debt.

Step-by-step explanation:

The question involves calculating the total amount owed after a year, considering both an investment that earns interest and a credit card debt that accrues interest. To calculate this, we need to consider the interest earned on the investment and the interest accrued on the credit card debt separately.

Calculating Investment Interest:

Investment Amount: $1500
Annual Interest Rate: 8.5%
Interest Earned in One Year: $1500 * 0.085 = $127.50

Calculating Credit Card Debt Interest:

Debt Amount: $1600
Annual Interest Rate: 19%
Interest Accrued in One Year: $1600 * 0.19 = $304

Calculating Total Amount Owed:

Total Interest Earned from Investment: $127.50
Total Interest Owed on Credit Card: $304
Total Amount Owed After One Year (credit card debt - investment returns): $1600 + $304 - $127.50 = $1776.50