person borrows $2,850 on a bank credit card at a nominal rate of 18% per year, which is actually charged at a rate of 1.5% per month. a) What is the annual percentage yield (APY) for the card? (Round your answer to one decimal place.) %

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Can you complete parts a through d for me?

A person borrows $2,850 on a bank credit card at a nominal rate of 18% per year, which is actually charged at a rate of 1.5% per month.

(a) What is the annual percentage yield (APY) for the card? (Round your answer to one decimal place.)
[______] %

(b) Assume that the person does not place any additional charges on the card and pays the bank $150 each month to pay off the loan. Let \( B_n \) be the balance owed on the card after n months. Find an explicit formula for \( B_n \).
[______]

(c) How many months will be required to pay off the debt? (Round your answer up to the nearest whole number.)
[______] months

(d) What is the total amount of money the person will have paid for the loan?
$[______]
Transcribed Image Text:A person borrows $2,850 on a bank credit card at a nominal rate of 18% per year, which is actually charged at a rate of 1.5% per month. (a) What is the annual percentage yield (APY) for the card? (Round your answer to one decimal place.) [______] % (b) Assume that the person does not place any additional charges on the card and pays the bank $150 each month to pay off the loan. Let \( B_n \) be the balance owed on the card after n months. Find an explicit formula for \( B_n \). [______] (c) How many months will be required to pay off the debt? (Round your answer up to the nearest whole number.) [______] months (d) What is the total amount of money the person will have paid for the loan? $[______]
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