Question

Lupe put $12,000in a certificate of deposit that gained interest at a rate of 9.5%. How much interest did the account gain after 2 months?

How much interest will you have to pay for a credit card balance of $791 that is 1 month overdue,if a 22% annual rate is charged?

Answer 1

1. Lupe put $12,000in a certificate of deposit that gained interest at a rate of 9.5%. How much interest did the account gain after 2 months?

Interest rate per month = 9.5%/12 = 0.007916666667

FV = PV * (1 + r)^n

PV = 12,000

r = 0.007916666667

n = 2

FV = 12,000 * (1 + 0.007916666667)^2

FV = 12,000 * 1.0158960069

FV = $12,190.7520828

Interest gained = FV - Deposit amount

Interest gained = 12,190.7520828 - 12,000

Interest gained = $190.7520828

2. How much interest will you have to pay for a credit card balance of $791 that is 1 month overdue,if a 22% annual rate is charged?

Monthly interest rate, r = 22%/12 = 0.01833333333

FV = PV * (1 + r)^n

PV = 791

r = 0.01833333333

n = 1

FV = 791 * (1 + 0.01833333333)^1

FV = 791 * 1.0183333333

FV = $805.5016666403

Interest paid = FV - Balance amount

Interest paid = 805.5016666403 - 791

Interest paid = $14.5016666403