The money saved by the introductory APR offer = $279.33
Step-by-step explanation:
The purchase she made using the credit card = $2700
For the first four months, APR = 0%
Thereafter, The standard APR = 29.9% = 29.9/100 = 0.299
The interest is compounded monthly.
The money saved by the introductory APR = interest over first 4 months.
Amount = P(1 + r/n)^nt
where P = principal amount = 2700
r = rate = 0.299
n = no. of years = 1/12
t = no. of times compounded = 4
Amount = 2700 (1+ 0.299/(1/12))^(1/12*4)
= 2700 ((0.833+0.299)/0.833)^(1/3)
= 2700 (1.132/0.833)^(1/3)
= 2700 (1.358)^(1/3)
= 2700 * 1.1073 = 2989.7
Interest = amount - principal
= 2989 - 2700 = 289
The money saved by the introductory APR offer ≈ $289
∴The option B $279.33 (approx) is the answer.
