Need Help Fast- Financial Question...

Question

Jakob has a previous balance of $861 on a credit card with a 20.8% APR compounded monthly. If he made a payment of $73 this month, what is the new balance on his credit card?

A. $1040.09

B. $967.09

C. $802.92

D. $788.00

Answer 1

The principal is $861 .

Interest rate 20.8% .

Interest is compounded monthly .

Formula for compound interest is  

P = principal amount (the initial amount you borrow or deposit) = $861

r  = annual rate of interest (as a decimal) = 0.208

t  = number of years the amount is deposited = one month = 1/12

A = amount of money accumulated after n years, including interest.

n  =  number of times the interest is compounded per year = 12 times .

He made a payment of $73 this month , so $73 has to subtract from net amount .

Balance amount = 875.924 - 73 = 802.924

So the Balance amount is 802.924 .

Option (c) is correct .

Comments

Thank you so much for explaining it and not just giving an answer!! It not only helped me with this problem but with the rest of the problems like this. Thanks again!!

~Kris