Question

You're really good at investing and you have $1,500 in your investment account. You make 8.5% interest a year on your investment account! For a year you owe $1,600 on a credit card. You pay 19% interest a year on this credit card. How much money are you making on your investment in a year? How much money are you paying in interest in a year on your credit card? What's your total gain/loss that year? (enter a negative value for loss)

Answer 1

My gain in that year is - $ 176.5

Explanation:

I have $ 1,500 in my investment account. The rate of interest for a year in my investment account = is 8.5 %.

So, the amount of money I am making on my investment in a year,

= $

= $ 127 .5

I owe $ 1600 on a credit card. Rate of interest a year on this credit card debt, = 19 %.

So, the money I am paying in interest in a year on my card,

= $

= $ 304

Since neither I withdraw money from my investment account except for the interest, nor did I pay my whole credit card debt except the interest, so, my gain in that year,

= $ (127.5 - 304)

= - $ 176.5

So, my loss in that year is $ 176.5