Apex Financial Literacy: Comparing Credit and APR

Jesse has a balance of $1200 on a credit card with an APR of 18.7%, compounded monthly. About how much will he save in interest over the course of a year if he transfers his balance to a credit card with an APR of 12.5%, compounded monthly? (Assume that Jesse will make no payments or new purchases during the year and ignore any possible late payment fees.)

A.$87.33

B.$85.77

C.$181.46

D.$117.85

Question

Mathematics

Aarav Vazquez

25 March, 08:35

Apex Financial Literacy: Comparing Credit and APR

Jesse has a balance of $1200 on a credit card with an APR of 18.7%, compounded monthly. About how much will he save in interest over the course of a year if he transfers his balance to a credit card with an APR of 12.5%, compounded monthly? (Assume that Jesse will make no payments or new purchases during the year and ignore any possible late payment fees.)

A.$87.33

B.$85.77

C.$181.46

D.$117.85

+5

Answers (1)

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Doc · Answer 1

Answer is D = 121.51 Use the Compound Interest Formulae A = P (1 + (R/12) / 100) ^ (12*n) Run 2 case P = 1700 R = 18.7, R = 12.5 n = 1 (as the problem is asking over the course of a year) Solve for A for both the R and subtract the two values of A to obtain ~121.51