Question

Please help with a step by step!!!How much interest will you have to pay for a credit card balmce of $614 that is 1 month overdue, if a 22% annual rate is charged?

Answer 1

You will have to pay $625.26.

Explanation:

The calculation is monthly compounded, then the 22% split over 12 months.

The general equation of compound interest is:

`\begin{gathered} y=P(1+(x)/(12))^(n*12) \\ where, \\ n=\text{ time in years} \\ P=\text{ sum owed} \end{gathered}`

In this case, only considering 1 month:

`\begin{gathered} y=614(1+(22)/(12*100))^1 \\ y=\text{ \$625.2566} \\ \text{ Rounding to the nearest hundredth:} \\ y=\text{ \$625.26} \end{gathered}`

You will have to pay $625.26.