Answer:
AI-generated answer
To solve this problem, let's assume you make a purchase of $1000. We will also assume an annual interest rate of 15%.
To show how your balance increases over time, we need to calculate the interest charged and add it to the balance.
First, let's calculate the interest charged. Since the interest rate is annual, we need to determine how often it is being charged. Let's assume it is charged monthly.
To find the monthly interest rate, divide the annual interest rate by 12:
15% / 12 = 1.25%
Now, let's calculate the interest charged for each time period:
1. After 1 month:
Interest charged = Balance * Monthly interest rate
Interest charged = $1000 * 1.25% = $12.50
New balance = Old balance + Interest charged
New balance = $1000 + $12.50 = $1012.50
2. After 3 months:
Interest charged = Balance * Monthly interest rate
Interest charged = $1012.50 * 1.25% = $12.66
New balance = Old balance + Interest charged
New balance = $1012.50 + $12.66 = $1025.16
3. After 6 months:
Interest charged = Balance * Monthly interest rate
Interest charged = $1025.16 * 1.25% = $12.82
New balance = Old balance + Interest charged
New balance = $1025.16 + $12.82 = $1037.98
Now we can create a table to summarize the balance over time:
Time period | Balance
-------------------------------
0 months | $1000.00
1 month | $1012.50
3 months | $1025.16
6 months | $1037.98
In this table, the balance increases over time due to the added interest. After 6 months, the balance is $1037.98.
Please note that this is just an example and the values can vary depending on the purchase price, interest rate, and time periods you choose. The key is to understand how interest affects the balance over time.
Explanation: