Imagine that two friends, Kimberle and Trinidsd, each buy an iPod touch for $280, and pay with a credit card. When this happens, the credit card company pays Apple, and the friends become indebted to the credit card company, For every year they dont pay back the debt, the company charges them interest: a percentage of what they awe. The interest rate is called an annual percentage rate (APR), while the amount owed is called a balance. Calculate how much each person would owe over time if neither made any payments to the credit card company, assuming interest is calculated once per year. In reality, credit card companies dont charge interest every year, they charge interest every month. To determine the monthly interest rate, divide the APR by 12 . Kimberte has an annual rate of 12\%. So Kimberte has a monthly rate of *. Trinidad has an arnual rate of 30%. 50 Trinidad 8 has a manthly rate of 3. Given that both Kimberle and Trinidad charge $280 initially calculate how much each person would owe over time if neither made any payments to the credit card company. assurning interest is compounded monthly. Do you think it matters hew often credit card companies charge interest? Explain. No, you poy the same amount of interest regardless of how often they calculate it. Yes it matters because the more often they calculate the interest the higher the amount goes. If neither friend made amy payments for 9 years, hew much would the $280lPod end up costing in total (with monthly compounding)? Kimberle's total cost (balance after 9 years): 5 Trinidads total cost (balance after 9 years): $ Imagine that two friends, Kimberle and Trinidsd, each buy an iPod touch for $280, and pay with a credit card. When this happens, the credit card company pays Apple, and the friends become indebted to the credit card company, For every year they dont pay back the debt, the company charges them interest: a percentage of what they awe. The interest rate is called an annual percentage rate (APR), while the amount owed is called a balance. Calculate how much each person would owe over time if neither made any payments to the credit card company, assuming interest is calculated once per year. In reality, credit card companies dont charge interest every year, they charge interest every month. To determine the monthly interest rate, divide the APR by 12 . Kimberte has an annual rate of 12\%. So Kimberte has a monthly rate of *. Trinidad has an arnual rate of 30%. 50 Trinidad 8 has a manthly rate of 3. Given that both Kimberle and Trinidad charge $280 initially calculate how much each person would owe over time if neither made any payments to the credit card company. assurning interest is compounded monthly. Do you think it matters hew often credit card companies charge interest? Explain. No, you poy the same amount of interest regardless of how often they calculate it. Yes it matters because the more often they calculate the interest the higher the amount goes. If neither friend made amy payments for 9 years, hew much would the $280lPod end up costing in total (with monthly compounding)? Kimberle's total cost (balance after 9 years): 5 Trinidads total cost (balance after 9 years): $
