Score <500 501-650 651-750
751-850
Rate (APR) 15.75%
12.5%
9.25%
5.75%
Question
Use the table to answer the question.
You have two credit cards. One has a balance of $1,675.00 at a 9.75% APR and the other has a balance of $2,378.00 and is dependent upon your credit score. Your score is 650. How much interest is accrued in the first month?
(1 point)
Responses
$38.38
$38.38
$44.82
$44.82
$31.94
$31.94
$25.01
To calculate the interest accrued in the first month, we need to use the APR and the balance.
For the credit card with a balance of $1,675.00 at a 9.75% APR, the interest can be calculated by multiplying the balance by the APR and dividing by 12 (to account for monthly compounding):
Interest = (Balance * APR) / 12
= ($1,675.00 * 0.0975) / 12
= $162.94 / 12
= $13.58
So, the interest accrued in the first month for the credit card with $1,675.00 balance is $13.58.
For the credit card with a balance of $2,378.00 and a credit score of 650, we can use the table to determine the APR. Since the credit score falls in the range of 501-650, the corresponding APR is 12.5%.
Interest = (Balance * APR) / 12
= ($2,378.00 * 0.125) / 12
= $297.25 / 12
= $24.77
So, the interest accrued in the first month for the credit card with a balance of $2,378.00 is $24.77.
Therefore, the total interest accrued in the first month for both credit cards is:
Total Interest = Interest for Card 1 + Interest for Card 2
= $13.58 + $24.77
= $38.35
Rounded to two decimal places, the total interest accrued in the first month is $38.35. Therefore, the correct answer is $38.38.