Questions: How much interest will you have to pay for a credit card balance of 950 that is 1 month overdue, if a 21% annual rate is charged? You will have to pay in interest. (Round to two decimal places.)

How much interest will you have to pay for a credit card balance of 950 that is 1 month overdue, if a 21% annual rate is charged?

You will have to pay in interest. (Round to two decimal places.)

Transcript text: How much interest will you have to pay for a credit card balance of $\$ 950$ that is 1 month overdue, if a $21 \%$ annual rate is charged? You will have to pay \$ $\square$ in interest. (Round to two decimal places.)

Solution

Solution Steps

Step 1: Convert the Annual Interest Rate to a Decimal

To convert the annual interest rate from a percentage to a decimal, divide by 100. Thus, $r = \frac{21}{100} = 0.21$.

Step 2: Calculate the Time Period in Years

The time period for which the balance is overdue is given as $t = 0.0833$ years.

Step 3: Apply the Simple Interest Formula

Using the simple interest formula $I = P \times r \times t$, where $P = 950$, $r = 0.21$, and $t = 0.0833$, we calculate the interest due as follows: $I = 950 \times 0.21 \times 0.0833 = 16.625$.

Step 4: Round the Resulting Interest Amount

Rounding the interest amount $I = 16.625$ to 2 decimal places, we get $I = 16.62$.