Listed below are the balances and annual percentage rates for Jimmy's credit cards. If Jimmy makes the same payment each month to pay off his entire credit card debt in the next 12 months, how much will he have paid in interest in the 12 month period? (Hint, find out how much interest Jimmy pays to each card over the 12 months seperately, and then add them together.) Credit Card Current Balance APR A $563.00 16% B $2,525.00 21% C $972.00 19% a. $321.83 b. $370.75 c. $449.24 d. $730.80 c

Hi there

We know that the formula of the present value of annuity ordinary is

Pv=pmt [ (1 - (1+r/k) ^ (-kn)) : (r/k) ]

Pv present value

PMT monthly payment

R interest rate

K compounded monthly 12 because the payment is monthly

N time

What we need from the formula above to find the monthly payment

So to find the monthly payment the formula

PMT=pv:[ (1 - (1+r/k) ^ (-kn)) : (r/k) ]

Another important things we need is how to find total payments and interest charge

To find total payments

Monthly payment*12

And to find interest charge

Total payments-present value

Now let's find interest charge for each credit card

Credit card A

The monthly payment is

PMT=563: ((1 - (1+0.16:12) ^ (

-12)) : (0.16:12)) = 51.08

Total payments

51.08*12=612.96

interest charge

612.96-563=49.96

Credit card b

PMT=2,525: ((1 - (1+0.21:12) ^ (

-12)) : (0.21:12)) = 235.11

Total payments

235.11*12=2,821.32

interest charge

2,821.32-2,525=296.32

Credit card c

PMT=972: ((1 - (1+0.19:12) ^ (

-12)) : (0.19:12)) = 89.58

Total payments

89.58*12=1,074.96

interest charge

1,074.96-972=102.96

So total interest charge for all credit cards is

102.96+296.32+49.96

=449.24 ... final answer

It's c

Good luck!

It is C ...