Question

. A person has a beginning balance of $660. She pays $90 on the 9th day, and she charges

320 on the 28th day. What amount of interest is due on her account if it has an APR of 26
ercent?
a.
b.
$7.48
$19.02
C. $20.79
d. $6.71
e. $13.38

Answer 1

To calculate the interest due, we first need to determine the average daily balance for the month.

From the beginning of the month until the 9th day, the balance is $660. From the 10th to the 27th, the balance is $660 - $90 = $570. On the 28th, the balance increases to $570 + $320 = $890.

So the average daily balance is:

[(31 - 9) x $570 + 9 x $660 + 22 x $890] / 31 = $691.29

Next, we need to calculate the monthly interest rate:

26% APR = 0.26 / 12 = 0.02167

Finally, we can calculate the interest due:

$691.29 x 0.02167 = $14.98

Therefore, the answer is closest to option (a) $7.48.