Question

A credit card company charges 24% per year on outstanding balances.

a) how much interest would be charged on an outstanding balance of $900 for 90 days?
b) how much s owed at the end of the 90 days?

Answer 1

The interest on an outstanding balance of $900 at 24% annual interest over 90 days is $53.26. Thus, the total amount owed after 90 days is $953.26.

Step-by-step explanation:

To calculate the interest charged on an outstanding balance of $900 for 90 days with an annual interest rate of 24%, we first find the daily interest rate, which is the annual rate divided by 365. Once we have the daily rate, we multiply it by the number of days interest is accruing, and then by the outstanding balance.

1. Calculate the daily interest rate: 24% per year / 365 = 0.06575% per day.
2. Calculate the interest for 90 days: 0.06575% * 90 days = 5.9175%.
3. Calculate the amount of interest on $900: $900 * 5.9175% = $53.26.

The total amount owed at the end of 90 days is the original balance plus the interest accrued: $900 + $53.26 = $953.26.