Question

Andy has a remaining unpaid balance of $845 on his credit card. His credit card company has an APR of 18 percent. How much will Andy pay in interest for one month?
$12.68
$152.10
$15
$1.25

Answer 1

Interest paid
Unpaid balance×APR×(1/12months)

Interest paid=
845×0.18×(1÷12)
=12.68

So the answer is a

Hope it helps!

Answer 2

Answer:

$12.68

Explanation:

Interest is calculated using the formula below. As the consideration for this question is a single month, compounding interest does not need to be considered:

$I = P(1+rt)-P$

where I is interest, P is the principal amount, r is the interest rate and t is the time of investment

APR is converted to monthly interest rate by dividing by 12 (for the number of months).

P = $ 845

r = 18% annually = 1.5% monthly

t = 1 month

$I = P(1+rt)-P$

$I = 845*(1+0.015*1)-845$

$I = 845*(1.015)-845$

$I = 857.675-845$

$I = 12.68$