Question

Horatio transferred a balance of $2600 to a new credit card at the beginning of the year. The card offered an introductory APR of 4.3% for the first 5 months and a standard APR of 13.7% thereafter. If the card compounds interest monthly, which of these expressions represents Horatio's balance at the end of the year? (Assume that Horatio will make no payments or new purchases during the year, and ignore any possible late payment fees.) O A. ($2600) 1+ 0 043) (10.137) 2600) (1.0043)*(1.0.137) OB. ($2600) 1+ O C. ($2600) 1+ ($2600)(1+0,043)*(1.0.137) 12 O D. ($2600) 1+ ($2600)(1+0043)*(1+0,137)​

Answer 1

C. ($2600) * (1 + 0.043) * (1 + 0.137/12)^12

Explanation:

- The initial balance is $2600, so we start with ($2600).

- Horatio has an introductory APR of 4.3% for the first 5 months. To calculate the balance after this period, we multiply it by (1 + 0.043).

- After the introductory period, the standard APR of 13.7% applies. However, since the interest compounds monthly, we need to divide it by 12 to get the monthly interest rate. So, we raise (1 + 0.137/12) to the power of 12, which represents the compounding over 12 months.