MATH SOLVE

5 months ago

Q:
# The opening balance of one of the 31-day billing cycles for Lorenzo's credit card was $4100, but after 15 days Lorenzo made a payment of $2300 to decrease his balance, and it stayed the same for the remainder of the billing cycle. If his credit card's APR is 24%, how much more in interest would he pay for the billing cycle with the previous balance method than with the adjusted balance method? A.$83.57B.$46.88C.$36.69D.$120.26

Accepted Solution

A:

Given:

31 days = 7,400

15 days = payment of 4,900

16 days = 7,400 - 4,900 = 2,500

Method 1:

7,400 * 22% * 31/365 = 138.27

Method 2: adjusted balance

7,400 * 22% * 15/365 = 66.90

2,500 * 22% * 16/365 = 24.11

66.90 + 24.11 = 90.21

138.27 - 90.21 = 48.06

She would pay 48.06 more with the previous balance method than with the adjusted balance method.

31 days = 7,400

15 days = payment of 4,900

16 days = 7,400 - 4,900 = 2,500

Method 1:

7,400 * 22% * 31/365 = 138.27

Method 2: adjusted balance

7,400 * 22% * 15/365 = 66.90

2,500 * 22% * 16/365 = 24.11

66.90 + 24.11 = 90.21

138.27 - 90.21 = 48.06

She would pay 48.06 more with the previous balance method than with the adjusted balance method.