Question

Review the information given based on a principal balance of $ 18,000 to answer the question: FICO Score Simple Interest Rate Total # of Payments Total Amount Paid 800-85012% 29 $ 20,160.00 740-799 15% 33 $ 20,700.00 670-739 18% 38 $21,240.00 580-669 21% 48 $ 21,780.00 300-579 28% 60 $23,040.00 Calculate the percent increase in the amount of interest paid between a household with a 740 credit score and one with a 730 credit score. Round the final answer to the near​est tenth

A. 17.3%
B.18.4%
C.19.5%
D. 20.0%

Answer 1

To calculate the percent increase in the amount of interest paid between a household with a 740 credit score and one with a 730 credit score, we first need to determine the total interest paid for each credit score.

For a 740 credit score, the total interest paid is:

$$\text{Total Interest Paid}_{740} = \$20,700.00 - \$18,000.00 = \$2,700.00$$

For a 730 credit score, which falls into the next category (670-739) with an 18% interest rate, the total interest paid is:

$$\text{Total Interest Paid}_{730} = \$21,240.00 - \$18,000.00 = \$3,240.00$$

Now, we calculate the percent increase in the amount of interest paid:

$$\text{Percent Increase} = \left( \frac{\text{Total Interest Paid}_{730} - \text{Total Interest Paid}_{740}}{\text{Total Interest Paid}_{740}} \right) \times 100$$

Plugging in the values we have:

$$\text{Percent Increase} = \left( \frac{\$3,240.00 - \$2,700.00}{\$2,700.00} \right) \times 100$$

$$\text{Percent Increase} = \left( \frac{\$540.00}{\$2,700.00} \right) \times 100$$

$$\text{Percent Increase} = 0.2 \times 100$$

$$\text{Percent Increase} = 20.0\%$$

So, the correct answer is **D. 20.0%**. The percent increase in the amount of interest paid between a household with a 740 credit score and one with a 730 credit score is **20.0%**, rounded to the nearest tenth.