Question

High interest rates make it difficult for people to pay off credit card debt in a reasonable period of time. The interest I (in dollars) paid on a $10,000 debt over 3 years when the interest rate is r% can be approximated by the equation shown below.†

I
175.393
+ 0.663 = r
If the credit card interest rate is 23.6%, find the amount of interest paid during the 3 years.

Answer 1

Explanation:

We are told that the equation is for a 3 year debt, which is also the period over which the . This means that we can use the equation.

(I/175.393) + 0.663 = r

We are given r = 23.6%

Plugging this vakue in for r gives;

l/175.393 + 0.663 = 23.6

l/175.393 = 23.6 - 0.663

l/175.393 = 22.937

I = 175.393 x 22.937

I = $4022.99, which is approximately

$ 4023