Question

Martin's unpaid credit card balance was $1539.39. his APR is 13.2%. what is his new balance after he makes one new transaction for $178

$1486.48
$1556.32
$1734.32
$1920.59

Answer 1

Given that Martin's unpaid credit card balance was $1539.39 and his APR is 13.2%.

APR is the annual interest rate, to get the monthly interest rate, we divide the APR by 12.

Thus, monthly interest rate is
`i= (13.2\%)/(12) =1.1%`

The interest charge for the month is given by
`I=Pi`, where P is the previous balance, i is the monthly interest rate.

Thus, interest charge is
`I=1,539.39(0.011)=1,539.39(0.011)=\$16.93`

The balance after the monthly interest charge = $1,539.39 + $16.93 = $1,556.32

Therefore, the balance after the new transaction is given by $1,556.32 + $178 = $1734.32