Economics Today and Tomorrow, Student Edition
Economics Today and Tomorrow, Student Edition
1st Edition
ISBN: 9780078747663
Author: McGraw-Hill
Publisher: Glencoe/McGraw-Hill School Pub Co
Question
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Chapter 4, Problem 25AA
To determine

To mention: The amount charged on credit card.

Expert Solution & Answer
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Explanation of Solution

Given Information:

The charges on credit card were $1000,

Interest rate is 15% (not variable)

Fee paid monthly of $50.

At the time of paying debt, the extra amount charged will be the interest on the amount borrowed which is not paid on a timely basis. For instance, the credit charges were $1,000, which should be paid within 2 months. If the amount is not paid within the time frame, then additional interest can be charged on the credit amount borrowed. The additional amount of $140 will be the interest charges on the amount of $1,000.

This amount is required to be paid off if person wants to clear its debt.

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