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The opening balance of one of the 31-day billing cycles for clay’s credit card was $3300 but after clay made a payment of $1900 to decrease his balance, and it stated the same for the remainder of the billing cycle. If his credit cards APR is 28%, how much more in interest would he pay for the billing cycle with previous balance method than with adjusted balance method?

Respuesta :

znk

Answer:

$23.32  

Step-by-step explanation:

APR = 28 %

Assume 1 yr = 365 days


1. Previous balance method:

Interest = principal × rate

          I = Pr

          I = 3300 × (0.28 × 31/365)

          I = $78.477

2. Adjusted balance method:

You don't say when Clay made his payment, so I will assume he paid on Day 15 .

(a) Interest for first 15 days

I = 3300 × (0.28 × 15/365)

I = $39.973

(b) Interest for last 16 days

Adjusted balance = $3300 - $1900  

Adjusted balance = $1400

I = 1400 × (0.28 × 16/365)

I  = $17.184

(c) Total interest

I = $37.973 + $17.184

I = $55.156

3. Difference

Difference = $78.477 - $55.156

Difference = $23.32

Clay would pay $23.32 more with the previous balance method than with the adjusted balance method.