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You see a pair of jeans on sale for 10% off the regular price of $50. You have a credit card with a 13% interest rate. If you buy the jeans today with the credit card and pay them off after two months, are you paying more or less than the regular $50 price for them? Please explain your decision.

User Amenhotep
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Final answer:

After applying the sale discount and calculating two months of interest with a 13% annual rate, you would pay less than the original price of the $50 jeans, even with credit card interest added.

Step-by-step explanation:

If you see a pair of jeans on sale for 10% off the regular price of $50, the sale price would be $50 - ($50 × 0.10) = $45. Now, if you purchase these with a credit card that has a 13% annual interest rate and you pay them off after two months, you would incur interest on that purchase.

To calculate this interest, you would break down the annual rate into a monthly rate, which would be 13% / 12 months = 1.0833% per month.

The interest for two months on the $45 would be $45 × 0.010833 × 2 = $0.9765, approximately.

Therefore, the total amount you would pay after two months is $45 + $0.9765 = $45.9765, which is still less than the original price of $50. So, even after paying the interest, you are paying less than the regular $50 price for the jeans.

User Alex Siri
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