Question

Schwartzman Co., makes a credit card sale to a customer for $800. The credit card sale has a grace period of 30 days and then an interest charge of 1.5% per month is added to the balance. If the unpaid balance on the above sale is $640 at the end of the grace period, the interest charge is

A) $6.40.
B) $9.60.
C) $11.00.
D) $16.00.

Answer 1

The interest charge on an unpaid balance of $640 after a grace period, with a monthly interest rate of 1.5%, is $9.60. This is calculated by multiplying the principal by the interest rate.

Step-by-step explanation:

The student is asking how to calculate the interest charge on an unpaid credit card balance after a grace period, given a specific interest rate and balance amount. If Schwartzman Co. makes a credit card sale for $800 with a 30-day grace period and then applies a 1.5% monthly interest charge on the remaining balance, we need to find the interest charge on $640, which is the unpaid balance after the grace period.

To calculate the interest charge, you would use the formula:

Interest = Principal × Interest Rate

Here, the Principal is $640, and the Interest Rate is 1.5% per month.

Interest = $640 × 0.015

Interest = $9.60

So the interest charge would be $9.60, which corresponds to option B.