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PROBLEM 2 ( 2 5 MARKS ) You receive a credit card application from First Abu Dhabi Bank which offers a rate of 0 .
PROBLEM MARKS
You receive a credit card application from First Abu Dhabi Bank which offers a rate of per year, compounded monthly for the first six months, increasing thereafter to compounded monthly. Assume that you transfer the $ balance from your existing credit card and make no subsequent payments.
a What will the balance be at the end of the first six months? marks
b What will the balance be at the end of the first year? marks
c How much interest will you owe at the end of the first year? marks
d What effect will an increasing interest rate have on the interest amount you owe at the end of the year? marks
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