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30 March, 13:39

Approximately how much interest will Karen owe on her credit card next month if the balance she carried over from the previous month was $2,450 and her annual interest rate is 18 percent?

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  1. 30 March, 13:51
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    Karen will owe an interest amount of=$36.75

    Explanation:

    Step 1: Determine the total amount after a month

    The total amount compounded annually can be expressed as;

    A=P (1+R/n) ^ (nt)

    where;

    A=total amount

    P=principal amount

    r=annual interest rate

    n=number of periods the interest is compounded annually

    t=number of years

    In our case;

    A=unknown

    P=$2,450

    r=18%=18/100=0.18

    n=12

    t=1/12

    replacing;

    A=2,450 (1+0.18/12) ^ (12*1/12)

    A=2,450 (1+0.18/12) ^1

    A=2,450 (1.015)

    A=$2,486.75

    Step 2: Determine the interest amount after a month

    Interest amount=total amount-principal amount

    where;

    total amount=$2,486.75

    principal amount=$2,450

    replacing;

    Interest amount=2,486.75-2,450=$36.75

    The interest amount=$36.75
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