Question

You make a purchase of $1,987.54 using a rewards credit card that gives you 2% cash back. If the credit card has a 17.75% APR and you do not make a payment the first month, how much is the difference between the first month's interest and the reward?
A.$28.81

B.$29.40

C.$19.48

D.$10.35

Answer 1

Answer: Option 'D' is correct.

Step-by-step explanation:

Since we have given that

Amount he make for a purchase = $1987.54

Cash back = 2%

Amount of cash back is given by

$\frac{2}{100}\times 1987.54\\\\=\ 39.75$

Rate of interest = 17.75%

Interest of first month will be

$Interest=\frac{P\times R\times T}{100}\\\\Interest=\frac{1987.54\times 17.75\times 1}{100\times 12}\\\\Interest=\ 29.39$

So, Difference between the first month's interest and the reward is given by

$39.75-29.39\\\\=\ 10.35$

Hence, Option 'D' is correct.

Answer 2

$10.35 is the answer