Question

Your friend wants to pay off his credit card with a balance of $880.00 and an interest rate of 16.65% APR by getting a loan from you. You agree to the loan, but insist your friend pay you interest of 3.25% APR. Your friend agrees. How much interest does your friend save at the end of the first month by paying you instead of the credit card?

a) $12.55


b) $11.12


c) $9.83


d) $19.78

Answer 1

Answer: $9.83

Step-by-step explanation:You need to calculate

($880/month)(.1665)(1/12) = $12.21

($880/month)(.0325)(1/12) = $2.38

Difference = $12.21 - $2.38 = $9.83

Answer 2

The Interest does your friend save at the end of the first month by Paying you instead of Credit Card is dollar 9.83.

What is Simple Interest?

''Simple Interest is a fee paid for borrowing money. The amount borrowed is called Principal the interest is expressed as a Percentage Rate of  the Interest".

What is Rate of  the Interest?

"Rate of  the Interest is the amount a lender charges a borrower and is a Percentage of the Principal - the amount loaned".

According to the question

Credit Balance is taken as Principal(P) = $880.00

Rate of Interest = 16.65%

Number of years = $\frac{1}{12}$

Formula for Simple Interest = $\frac{pnr}{100}$

Simple Interest=  $\frac{(880)(1)(16.65)}{(12)(100)}$

=  12.21

Friend Pay you of Rate of Interest = 3.25%

Formula for Simple Interest is= $\frac{pnr}{100}$

=$\frac{(880)(1)(3.25)}{(12)(100)}$

= 2.38

In order to find the saving money make if Difference between Simple Interest paid at rate of interest 16.65% and Simple Interest paid at rate of Interest 3.25%

=  12.21 - 2.38

=  9.83

Hence, the Interest save at the end of the first month by paying you instead of the credit card $9.83.

To learn more about Simple Interest here

https://brainly.com/question/11856460

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