Credit card interest question (1 Viewer)

[mathsisharddd]

The River Bank offers a "Vista" credit card with no interest-free period. Interest is charged at a
flat rate of 18.8% p.a. Calculate the interest charged on a balance of $847 if the card is paid off
after 64 days.
(A) $13.69
(B) $27.92
(C) $339.70
(D) $2792.08

I thought you divided 18.8 by 365, then multiply by 847x64... that gets D but the answer is B.

How do you do this?

Thanks!

 

[jockrussell]

you almost got it u change the rate to a decimal so it will be .188 in ur calculations instead of 18.8

 

[mathsisharddd]

thank you so much. how about this one?

Anusha borrows $9900 in a flat-rate loan over 3 years, with interest charged at 9% per annum.
Calculate the amount of each monthly repayment.
(A) $74.25
(B) $222.75
(C) $349.25
(D) $1047.75

I tried the monthly repayment annuity formula, so
9900((0.09(1.09^3) / (1.09^3-1) but it got the wrong answer. The answer is C.

Thanks!

 

[Paj20]

thank you so much. how about this one?

Anusha borrows $9900 in a flat-rate loan over 3 years, with interest charged at 9% per annum.
Calculate the amount of each monthly repayment.
(A) $74.25
(B) $222.75
(C) $349.25
(D) $1047.75

I tried the monthly repayment annuity formula, so
9900((0.09(1.09^3) / (1.09^3-1) but it got the wrong answer. The answer is C.

Thanks!

Its simple interest so you cant use the annuity. Its just I=PRN formula.


So 9900 x 0.09 (9% in a decimal) x 3 (years)

which gives you $2673 interest.

So total to be repaid is 9900 + 2673

Which is $12573

Theres 36 months is 3 years. So just divide the 12573 by 36

and you get $349.25