Question

The opening balance of one of Jennies 30-day billing cycles for her credit card was $1220, and it remained that amount for the first 10 days of her billing cycle. She then made a purchase for $470, increasing her balance to $1690, where it remained for the next 10 days. Jennie then made a payment of $350, so her balance for the last 10 days of the cycle was $1340. The APR of Jennies credit card is 33%, QUESTION 1: What is her periodic interest rate? QUESTION 2: How much was Jennie charged in interest for the billing Cycle?

Answer 1

Answer:

1) 2.71%

2) $38.32

Step-by-step explanation:

Opening balance = $1220

Balance after 10 days (after expense) = $1690

Balance after 10 days(after payment) = $1340

APR = 33%

1) Periodic interest rate = APR × $\frac{No. of days in a billing cycle}{365}$

                                  =  33%× 30/365

                                  = 2.71%

2) Interest charged for first 10 days = $\frac{1220*2.71*\frac{10}{30} }{100}$

                                                              = $11.02

Interst charged for the next 10 days = $\frac{1690*2.71*\frac{10}{30} }{100}$

                                                            = $15.2

Interest charged for the next 10 days = $\frac{1340*2.71*\frac{10}{30} }{100}$

                                                           = $12.10

Total interest for 30 days = 11.02+15.2+12.10

                                          = $38.32