MBF3C (Gr.11 Math) UNIT 8: PERSONAL FINANCE (All about cheques accounts, savings accounts, investments, credit cards, obtaining vehicles, operating a vehicle) Some examples and formula provided that can be use, just choose formula that suits the question :)

Calculating Credit Card Interest If you do not pay your credit balance in full by the due date, the credit card company will do two things: charge you SIMPLE INTEREST on the balance owing from the date of purchase until the due date charge you DAILY COMPOUND INTEREST from the due date until the balance is paid in full. So depending on when you make a payment and when you pay your balance, we will need to use the two formulas to calculate the interest owed: Simple Interest: I = Prt (remember, time must be in years) Compound Interest: A = P(l + %)nc Since interest is compounded daily, we can revise this formula to i \\365(55 A=P(1+3) (355) A= P(1+ g5) The above formula determines the total owed which is the principal aount borrowed PLUS interest. To determine the amount of interest, we have to subtract the principal amount from A: I=A-P Since your purchases are all made on different days, the credit card company determines the average daily balance and uses that to calculate the interest. For the purposes of this course, we will ignore the purchase dates and just use the credit card balance to determine the interest amount. Question 3 (2 points) Determine the minimum monthly payment on the Visa Credit Card if you had a balance of $299.12 and the terms of the credit card are minimum payment of $15 or 5.5% of the balance whichever is greater. (2 marks)