Question

Arnold's credit card has a balance of $1,543. The annual percentage rate for his credit card is 18.25%. What is the daily interest rate ( 365 day in 1 year) and what amount of simple interest will Arnold owe after 30 days? Round the answer to the nearest penny.

Answer 1

To convert an annual interest rate to a daily interest rate based on simple interest, divide the annual interest rate by 365, the number of days in a year.

This way,

`(18.25)/(365)=0.05`

The daily interest rate is 0.05%

To get the simple interest in a 30 day period, we use the formula for simple interest and get:

`1543((0.05)/(100)\cdot30)\Rightarrow23.15`

The interest for a 30 day period is $23.15