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Interest at the end of the year

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You receive a credit card application offering an intro rate of 2.4% per year, compounded monthly for the first six months, and then increasing to 18% compounded monthly. Assuming you transfer $6,000 from another card and make no subsequent payments, how much interest will you owe at the end of the first year?

Use formulas, not excel

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Solution Summary

The solution explains how to calculate the amount of interest owed at the end of the year with change in interest rates during the year.

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The interest rate applicable for the initial six months is 2.4%. We calculate the interest amount for the first six months using this rate. The interest is compounded monthly, so we ...

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