Question

Suppose Billy had a zero balance on his credit card but then used the card to charge $1,900 of his tuition. His annual

interest rate is 30%. Complete parts a) through d) below.

a) What percentage will be charged each month?

He will be charged ______% every month. (Type an integer or a decimal.)

b) What will be the interest charge for the first month?

He will be charged $_______ in interest for the first month. (Round to the nearest cent as needed.)

c) What is his balance after making a $100 payment?

His balance after the $100 payment is $_________. (Round to the nearest cent as needed.)

d) What is the interest charge for the second month?

He will be charged $________ in interest for the second month. (Round to the nearest cent as needed.)

Answer 1

Amount used from credit card = $1900

Rate of interest for 12 months = 30%

a- What percentage will be charged each month?

He will be charged
`(30)/(12)=2.5` % every month.

b- ) What will be the interest charge for the first month?

`interest=(p*r*t)/(100)`

=
`(1900*30*1)/(100*12)` (1 month is taken as
`(1)/(12)` )

$47.50

He will be charged $47.50 in interest for the first month.

c) What is his balance after making a $100 payment?

Let us assume that Billy paid $100 after 1st month. So after 1st month the amount due is 1900+47.5= $1947.50

Billy paid $100 from 1947.50, so balance remains = 1947.50-100= $1847.50

d) What is the interest charge for the second month?

Now interest charge will be calculated on 1847.50

interest =
`(1847.50*30*1)/(100*12)`

= $ 26.39 or rounding it off we get $26.40.