A person borrows $3,000 on a bank credit card at a nominal rate of 18% per year, which

Chapter 5, Problem 27

(choose chapter or problem)

A person borrows $3,000 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 rate (APR) for the card? (See Example 5.6.8 for a definition of APR.)

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 long will be required to pay off the debt?

d. What is the total amount of money the person will have paid for the loan?

Text Transcription:

B_n

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