Question

Each month, a credit card company charges an annual interest rate of 14.9%. On the unpaid balance of the account Mrs Jones pays $200 of her $950 balance. If she does not charge any other items, find the amount of interest she will pay next month.

Answer 1

To calculate the interest Mrs. Jones will pay next month on her credit card, subtract her payment from the balance, convert the annual interest rate to a monthly rate, and apply it to the new balance to find the interest of $9.31.

Step-by-step explanation:

The question is asking us to calculate the amount of interest Mrs. Jones will pay on her credit card balance after making a $200 payment on an initial $950 balance with an annual interest rate of 14.9%.

To find the interest for the next month, we must first determine the new balance after the payment, which is $950 - $200 = $750.

Next, we calculate the monthly interest rate by dividing the annual rate by 12. Thus, the monthly rate is 14.9% / 12 = 1.2417%. Finally, we apply this rate to the new balance to find the interest for the next month: $750 * 1.2417% = $9.31.