Question

This table can be used to organize Gigi’s credit card balances and payments over 6 months. The annual percentage rate on the credit card is 14%.

Gigi’s Credit Card Payments
Month
Balance
Payment
Interest Rate
Interest Charged
1
$650
$300
0.01167
$4.08
2
$354.08
$50
0.01167

3
$307.63
$50
0.01167

4
$260.64
$50
0.01167

5
$213.10
$50
0.01167

6
$165
$50
0.01167


What is the amount of interest charged for the first 6 months? (16.34)

Answer 1

The amount of interest charged for the first 6 months is $22.80.

Step-by-step explanation:

To calculate the amount of interest charged for the first 6 months, we need to sum up the interest charged for each month. The interest charged for each month can be calculated by multiplying the balance by the monthly interest rate. The monthly interest rate can be found by dividing the annual percentage rate (APR) by 12. Let's calculate the interest charged for each month and then sum them up:

1. Interest charged for month 1: $650 * 0.01167 = $7.61
2. Interest charged for month 2: $354.08 * 0.01167 = $4.13
3. Interest charged for month 3: $307.63 * 0.01167 = $3.60
4. Interest charged for month 4: $260.64 * 0.01167 = $3.04
5. Interest charged for month 5: $213.10 * 0.01167 = $2.49
6. Interest charged for month 6: $165 * 0.01167 = $1.93

Now, let's sum up the interest charged for each month: $7.61 + $4.13 + $3.60 + $3.04 + $2.49 + $1.93 = $22.80

Therefore, the amount of interest charged for the first 6 months is $22.80.

Answer 2

The correct answer is the first option, or 16.34

Just got it right on the edge 2020 exam review, hope this helps!! :)