Frank is 21 years old and has his first credit card with a monthly APR of 1.5%. He went on a shopping spree the first month and now has $1,000 balance. Budget-wise, it would be nice if he could just pay the minimum payment of $40 each month until he graduates in 5 months.

a. How much of the $40 payment goes to interest and what percentage goes toward reducing the principal?

b. What is Frank’s APR (Annual Percentage Rate)? 

c. He missed two payments and his default rate of 36% APR kicks in. What is his monthly percentage rate now?