Solve the Problem

question 188

Essay

Solve the problem.
-The table below shows the expenses and payments for 4 months on a credit card account
with an initial balance of $500. Assume that the interest rate is 1.7% per month (20.4% APR)and that interest for a given month is based on the balance for the previous month.
Complete the table. $$\begin{array} { l c c c c } \hline \text { Month } & \text { Payment } & \text { Expenses } & \text { Interest } & \text { Balance } \\\hline 0 & - & - & - & \$ 500 \\1 & \$ 200 & \$ 120 & 1.7 \% \times \$ 500 = \$ 8.50 & \$ 428.50 \\2 & \$ 100 & \$ 310 & & \\3 & \$ 300 & \$ 60 & & \\4 & \$ 250 & \$ 180 & & \\\hline\end{array}$$

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Definitions:

Remote Event

An event or condition with a very low chance of occurring, often considered insignificant in financial forecasting and analysis.

Probable Likelihood

This term refers to the high chance of occurrence or expectation that a specific event or outcome will happen.

Liability

Financial obligations or debts that a company or individual owes to others, required to be settled over time.

Accrual

Involves recording revenues and expenses when they are incurred, regardless of when cash transactions occur.