Assume that you have a balance of $5000 on your Visa credit card and that you make no more charges. If your APR is 22% and each month you make only the minimum payment of 3% of your balance, then find a formula for the balance after t monthly payments.
This problem is solved by looking at the definitions of certain terms. APR (annual percentage return) is the percent that you would pay on the balance if you left it in the bank for a year with no compounding. This gets confusing because the APR is NOT the percent you would expect to pay in real life, where the interest gets applied and compounded (that real percent is the APY or annual percentage yield, which should be greater than APR).
To calculate the amount of debt you have at any given...
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