To determine which situation is best after one year using simple interest calculations, we'll calculate the interest earned on savings and the interest charged on credit cards for each option.
Option A:
- Savings: $3280 at 4.25% APR
- Interest = Principal × Rate × Time = $3280 × 0.0425 × 1 = $139.80
- Debt: $1320 at 13.5% APR
- Interest = $1320 × 0.135 × 1 = $178.20
- Net outcome after one year = Interest earned - Interest owed = $139.80 - $178.20 = -$38.40
Option B:
- Debt: $2013.85 at 9.85% APR
- Interest = $2013.85 × 0.0985 × 1 = $197.36
- Net outcome = -$197.36
Option C:
- Debt: $524.85 at 8.4% APR
- Interest = $524.85 × 0.084 × 1 = $44.08
- Savings: $790 at 4.35% APR
- Interest = $790 × 0.0435 × 1 = $34.365
- Net outcome = Interest earned - Interest owed = $34.365 - $44.08 = -$9.715
Option D:
- Debt: $1040 at 4.9% APR
- Interest = $1040 × 0.049 × 1 = $51.96
- Net outcome = -$51.96
Summary of Net Outcomes:
- Option A: -$38.40
- Option B: -$197.36
- Option C: -$9.715
- Option D: -$51.96
Conclusion:
The best situation after one year is Option C, which results in the least negative outcome (-$9.715). Therefore, the answer is: c) having $524.85 on a credit card with 8.4% APR and $790 in a savings account at a 4.35% APR.