Suppose that you made a $1, 200 purchases on your credit card two years ago to pay for an unexpected car repair and have only made the minimum $50 monthly payments since then.
a. If your credit card has an interest rate of 18% compounded monthly (commonly referred to as the APR - annual percentage rate), what is your current credit card balance?
b. What is the effective annual interested rate of your credit card (commonly referred to as the APY - annual percentage yield)?