Question

Melissa owns a credit card with a 8.9% APR that calculates interest using the ADB excluding new purchases method. The balance after her last billing cycle was $550. What was her finance charge for this credit card last month? Please show your math. Hint: Put your decimal point in the right place. If it’s 0.015555557, then you would multiply by 0.016, and if it’s 0.65555556 then you would multiply by 0.66.

Answer 1

Answer:

$4.081

Step-by-step explanation:

We have been given that Melissa owns a credit card with a 8.9% APR. The balance after her last billing cycle was $550.      

First of all, we will find period rate by dividing APR by 12 as 1 years equals 12 months.

$\text{Period rate}=\frac{8.9\%}{12}=0.74166\%$

The finance charge would be 0.74166% of $550.

$\text{The finance charge}=\ 550\times \frac{0.742}{100}$

$\text{The finance charge}=\ 550\times 0.00742$

$\text{The finance charge}=\ 4.081$

Therefore, the finance charge would be $4.081.