Question

Suppose Billy had a zero balance on his credit card but then used the card to charge $1,900 of his tuition. His annual

Answer 1

Amount used from credit card = $1900

Rate of interest for 12 months = 30%

a- What percentage will be charged each month?

He will be charged $\frac{30}{12}=2.5$ % every month.

b- ) What will be the interest charge for the first month?

$interest=\frac{p*r*t}{100}$

=$\frac{1900*30*1}{100*12}$  (1 month is taken as $\frac{1}{12}$ )

$47.50

He will be charged $47.50 in interest for the first month.

c) What is his balance after making a $100 payment?

Let us assume that Billy paid $100 after 1st month. So after 1st month the amount due is 1900+47.5= $1947.50

Billy paid $100 from 1947.50, so balance remains = 1947.50-100= $1847.50

d) What is the interest charge for the second month?

Now interest charge will be calculated on 1847.50

interest =$\frac{1847.50*30*1}{100*12}$

= $ 26.39 or rounding it off we get $26.40.