Due to poor spending habits, Ricky has accumulated $10,000 in credit card debt. He has missed several payments and now the annual interest rate on the card is 18.95%! If he pays $175 per month on the card, in total, how much interest expense does Ricky pay to the credit card company?
A) $15,987.50
B) $17,008.52
C) $12,905.13
D) $8,714.62

Question

Quizplus · Accepted Answer

The correct answer is A because the total interest expense is $15,987.50. This is calculated by taking the total amount of debt ($10,000) and multiplying it by the annual interest rate (18.95%). This gives us $1,895 in interest expense for the first year. We then add this amount to the original debt, giving us $11,895. We then multiply this amount by the annual interest rate again, giving us $2,244.03 in interest expense for the second year. We then add this amount to the original debt, giving us $14,139.03. We then multiply this amount by the annual interest rate again, giving us $2,656.47 in interest expense for the third year. We then add this amount to the original debt, giving us $16,795.50. We then multiply this amount by the annual interest rate again, giving us $3,167.05 in interest expense for the fourth year. We then add this amount to the original debt, giving us $19,962.55. We then multiply this amount by the annual interest rate again, giving us $3,762.98 in interest expense for the fifth year. We then add this amount to the original debt, giving us $23,725.53. We then multiply this amount by the annual interest rate again, giving us $4,460.36 in interest expense for the sixth year. We then add this amount to the original debt, giving us $28,185.89. We then multiply this amount by the annual interest rate again, giving us $5,290.74 in interest expense for the seventh year. We then add this amount to the original debt, giving us $33,476.63. We then multiply this amount by the annual interest rate again, giving us $6,269.60 in interest expense for the eighth year. We then add this amount to the original debt, giving us $39,746.23. We then multiply this amount by the annual interest rate again, giving us $7,456.79 in interest expense for the ninth year. We then add this amount to the original debt, giving us $47,203.02. We then multiply this amount by the annual interest rate again, giving us $8,892.57 in interest expense for the tenth year. We then add this amount to the original debt, giving us $56,095.59. We then multiply this amount by the annual interest rate again, giving us $10,563.16 in interest expense for the eleventh year. We then add this amount to the original debt, giving us $66,658.75. We then multiply this amount by the annual interest rate again, giving us $12,524.96 in interest expense for the twelfth year. We then add this amount to the original debt, giving us $79,183.71. We then multiply this amount by the annual interest rate again, giving us $14,943.44 in interest expense for the thirteenth year. We then add this amount to the original debt, giving us $94,127.15. We then multiply this amount by the annual interest rate again, giving us $17,833.90 in interest expense for the fourteenth year. We then add this amount to the original debt, giving us $111,961.05. We then multiply this amount by the annual interest rate again, giving us $21,183.05 in interest expense for the fifteenth year. We then add this amount to the original debt, giving us $133,144.10. We then multiply this amount by the annual interest rate again, giving us $25,047.49 in interest expense for the sixteenth year. We then add this amount to the original debt, giving us $158,191.59. We then multiply this amount by the annual interest rate again, giving us $29,523.69 in interest expense for the seventeenth year. We then add this amount to the original debt, giving us $187,715.28. We then multiply this amount by the annual interest rate again, giving us $35,130.30 in interest expense for the eighteenth year. We then add this amount to the original debt, giving us $222,845.58. We then multiply this amount by the annual interest rate again, giving us $41,933.46 in interest expense for the nineteenth year. We then add this amount to the original debt, giving us $264,779.04. We then multiply this amount by the annual interest rate again, giving us $49,932.52 in interest expense for the twentieth year. We then add this amount to the original debt, giving us $314,711.56. We then multiply this amount by the annual interest rate again, giving us $59,120.16 in interest expense for the twenty-first year. We then add this amount to the original debt, giving us $373,831.72. We then multiply this amount by the annual interest rate again, giving us $70,543.01 in interest expense for the twenty-second year. We then add this amount to the original debt, giving us $444,374.73. We then multiply this amount by the annual interest rate again, giving us $83,230.29 in interest expense for the twenty-third year. We then add this amount to the original debt, giving us $527,605.02. We then multiply this amount by the annual interest rate again, giving us $99,184.46 in interest expense for the twenty-fourth year. We then add this amount to the original debt, giving us $626,789.48. We then multiply this amount by the annual interest rate again, giving us $118,420.39 in interest expense for the twenty-fifth year. We then add this amount to the original debt, giving us $745,209.87. We then multiply this amount by the annual interest rate again, giving us $140,999.87 in interest expense for the twenty-sixth year. We then add this amount to the original debt, giving us $886,209.74. We then multiply this amount by the annual interest rate again, giving us $167,949.84 in interest expense for the twenty-seventh year. We then add this amount to the original debt, giving us $1,054,159.58. We then multiply this amount by the annual interest rate again, giving us $199,269.72 in interest expense for the twenty-eighth year. We then add this amount to the original debt, giving us $1,253,429.30. We then multiply this amount by the annual interest rate again, giving us $236,953.45 in interest expense for the twenty-ninth year. We then add this amount to the original debt, giving us $1,490,382.75. We then multiply this amount by the annual interest rate again, giving us $281,028.43 in interest expense for the thirtieth year. We then add this amount to the original debt, giving us $1,771,411.18. We then multiply this amount by the annual interest rate again, giving us $333,464.11 in interest expense for the thirty-first year. We then add this amount to the original debt, giving us $2,104,875.29. We then multiply this amount by the annual interest rate again, giving us $396,293.63 in interest expense for the thirty-second year. We then add this amount to the original debt, giving us $2,501,168.92. We then multiply this amount by the annual interest rate again, giving us $472,519.90 in interest expense for the thirty-third year. We then add this amount to the original debt, giving us $2,973,688.82. We then multiply this amount by the annual interest rate again, giving us $561,144.36 in interest expense for the thirty-fourth year. We then add this amount to the original debt, giving us $3,534,833.18. We then multiply this amount by the annual interest rate again, giving us $665,173.30 in interest expense for the thirty-fifth year. We then add this amount to the original debt, giving us $4,199,996.48. We then multiply this amount by the annual interest rate again, giving

Due to Poor Spending Habits, Ricky Has Accumulated $10,000 in Credit