Question

Calculate the interest due on an outstanding credit card balance of $800 for 27 days if the interest rate is 2.8% per annum, compounded daily (Assume that there are 365 days per year). Give your answer to the nearest cent.

Answer 1

The interest due on an outstanding credit card balance of $800 for 27 days with an interest rate of 2.8% per annum, compounded daily, is approximately $5.97.

Step-by-step explanation:

To calculate the interest due on an outstanding credit card balance, we can use the formula:

Interest = (Principal × Rate × Time) / 365

Where:

• Principal is the outstanding balance ($800 in this case)
• Rate is the annual interest rate (2.8%)
• Time is the number of days (27)

Plugging these values into the formula:

Interest = (800 × 0.028 × 27) / 365 = $5.97 (rounded to the nearest cent)