Question

Use the following compound interest formula to complete the problem currently you have two credit cards H and die card H has a balance of $1186.44 in an interest rate at 14.74% compounded annually card I has a balance of $1522.16 in an interest rate of 12.5% compounded monthly assuming that you make no purchases and no payments with this card either card after three years which cards balance will have increased by more and how much greater will increase be

Answer 1

Answer:

  card I by $82.50

Step-by-step explanation:

As you know the compound interest formula is ...

  A = P(1 +r/n)^(nt)

For card H, P=1186.44, r=0.1474, n=1, t=3, so the balance will be ...

  A = $1186.44(1.1474^3) ≈ $1792.22

For card I, P=1522.16, r=0.125, n=12, t=3, so the balance will be ...

  A = $1522.16(1 +.125/12)^(12·3) ≈ $2210.44

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The increase in card H is ...

  $1792.22 -1185.44 = $605.78

The increase in card I is ...

  $2210.44 -1522.16 = $688.28 . . . . . . card I increased more

The difference in the increases is ...

  $688.28 -605.78 = $82.50

Card I increased by $82.50 more than card H in the time period.