Answered

Examine the credit terms below:

\begin{tabular}{|l|l|l|l|}
\hline
\multicolumn{1}{|l|}{Interest Rates and Interest Charges} \\
\hline
\multicolumn{1}{|l|}{} \\
\begin{tabular}{l}
Annual Percentage Rate (APR) \\
for Purchases
\end{tabular} &
\begin{tabular}{l}
[tex]$0 \%$[/tex] introductory APR for 10 months. After that, your APR will be [tex]$10.99 \%, 15.99 \%$[/tex], \\
or [tex]$17.99 \%$[/tex]. This APR will vary with the market, based on the Prime Rate.
\end{tabular} \\
\hline
\end{tabular}

What happens to the APR after 10 months?

A. It decreases to 0\%.

B. It increases to a variable rate of [tex]$10.99 \%, 15.99 \%$[/tex], or [tex]$17.99 \%$[/tex].

C. The credit terms do not specify how the rate will change.

D. There is no change to the interest rate.



Answer :

Let's look into the details of the credit terms provided and analyze the changes in the Annual Percentage Rate (APR).

The given credit terms state:

1. The APR for purchases is 0% as an introductory rate for the first 10 months.
2. After the initial 10-month period, the APR will change.
3. The new APR will be a variable rate, which will be either 10.99%, 15.99%, or 17.99%.

Given this information, we can determine the following:

- The initial APR of 0% lasts only for the first 10 months, meaning it is only temporary.
- After these 10 months, the APR does not remain at 0%. Instead, it switches to one of the specified variable rates.
- The new APR can be 10.99%, 15.99%, or 17.99%. This indicates that the APR will increase after the initial 10-month period.

Thus, the correct interpretation is that after 10 months, the APR will increase from the introductory 0% to a variable rate of 10.99%, 15.99%, or 17.99%.

Therefore, the correct answer is:

It increases to a variable rate of 10.99%, 15.99%, or 17.99%.