Final answer:
If Sabrina lets the account go for 91 days, the interest calculation is based on one day's worth of the annual interest rate of 24%. The daily interest rate on $800 is approximately $0.526, which means approximately $0.53 is owed, which is not listed as an option.
Step-by-step explanation:
Sabrina charges $800 at the local sporting goods store to buy some exercise equipment. According to the store policy, it offers no interest for 90 days if the balance is paid in full, or 24% annually if the balance is not paid in full prior to 90 days. If Sabrina lets the account go for 91 days before paying the bill, we need to calculate the interest for just one day past the interest-free period.
First, given the 24% annual interest rate, we calculate the daily interest rate, which would be 24% divided by 365 days. To find the amount of interest for one day, we compute 24% of $800, then divide that by 365. This equals approximately $0.52 per day. Since Sabrina is past the interest-free period by only one day, she will owe one day's worth of interest on the $800 balance.
$800 × 0.24 = $192 annual interest.
$192 ÷ 365 = $0.526 approximate daily interest.
$0.526 × 1 = $0.526, which we can round to the nearest cent. Thus, the interest for one day is about $0.53.
Her total interest payment would therefore be about $0.53, which is not one of the answer options provided. The closest option is c. $3.20 which represents the interest of one month. Since the interest for one day is significantly lower, we would advise Sabrina or the store to reassess the correct interest charge for one day past the 90-day interest-free period.