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 <em>assume he paid on Day 15</em>
.
(a) <em>Interest for first 15 days
</em>
I = 3300 × (0.28 × 15/365)
I = $39.973
(b) <em>Interest for last 16 days
</em>
Adjusted balance = $3300 - $1900
Adjusted balance = $1400
I = 1400 × (0.28 × 16/365)
I = $17.184
<em>(c) </em><em>Total interest
</em>
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.