Answer:
Step-by-step explanation:
1. Calculate the monthly interest owed during year 1
- Interest for first year: 8%
- The monthly rate is the yearly rate divided by 12: 8% / 12 = 0.08/12
- The monthly interest owed is the monthly rate times the balance: (0.08/12)×$1,800 = $12.00
2. Calculate the monthly interest owed during year 2
- Interest for second year: 23%
- The montly rate is the yearly rate divided by 12: 23% / 12 = 0.23/12
- The monthly interest owed is the monthly rate times the balance: (0.23/12)×$1,800 = $34.50
3. Calculate the difference
- Difference in the monthly interest owed during year 1 and year 2 = $34.50 - $12.00 = $22.50
Hence, the answer is the option c) $22.50