Answer:
Lois will save $152.51 when she wil transfer her balance.
Explanation:
Amount to be paid in 1 year for original credit card is given as
[tex]P_1^{'}=P*(1+r_1)^t[/tex]
Here [tex]P^{'}_1[/tex] is the amount to be paid after P is the balance which is 970, [tex]r_1[/tex] is the APR for first credit card which is 24.2% and t is compounding frequency which is 12 so
[tex]P_1^{'}=P*(1+r_1)^t\\P_1^{'}=970*(1+\dfrac{24.2}{12}\%)^{12}\\P_1^{'}=970*(1.0207)^{12}\\P_1^{'}=970*1.2707\\P_1^{'}=\$1232.61[/tex]
Similarly for the second one the values are calculated as
[tex]P_2^{'}=P*(1+r_2)^t\\P_2^{'}=970*(1+\dfrac{10.8}{12}\%)^{12}\\P_2^{'}=970*(1.108)^{12}\\P_2^{'}=970*1.1135\\P_2^{'}=\$1080.10[/tex]
The differnce of the two values is calculated as
[tex]P_1'-P_2'=1232.61-1080.10\\Difference=\$ 152.51[/tex]
The difference is $152.51 which she could save.
