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Sonja's credit card has an APR of 21%, calculated on the previous monthly balance, and a minimum payment of 2%, starting the month after the first purchase. Her credit card record for the last 7 months is shown in the table below.

| End of month | Previous balance | New charges | Payment received | Finance charges | Principal paid | New balance |
|--------------|------------------|-------------|------------------|----------------|----------------|-------------|
| 1 | [tex]$0.00 | $[/tex]700.00 | [tex]$0.00 | $[/tex]0.00 | [tex]$0.00 | $[/tex]700.00 |
| 2 | [tex]$700.00 | $[/tex]0.00 | [tex]$14.00 | $[/tex]12.25 | [tex]$1.75 | $[/tex]698.25 |
| 3 | [tex]$698.25 | $[/tex]0.00 | [tex]$13.97 | $[/tex]12.22 | [tex]$1.75 | $[/tex]696.50 |
| 4 | [tex]$696.50 | $[/tex]0.00 | [tex]$13.93 | $[/tex]12.19 | [tex]$1.74 | $[/tex]694.76 |
| 5 | [tex]$694.76 | $[/tex]0.00 | [tex]$13.90 | $[/tex]12.16 | [tex]$1.74 | $[/tex]693.03 |
| 6 | [tex]$693.03 | $[/tex]0.00 | [tex]$13.86 | $[/tex]12.13 | [tex]$1.73 | $[/tex]691.29 |
| 7 | [tex]$691.29 | $[/tex]0.00 | [tex]$13.83 | $[/tex]12.10 | [tex]$1.73 | $[/tex]689.57 |

About what percentage of Sonja's payments so far have gone to paying interest?

A. 23%
B. 10%
C. 21%
D. 87%



Answer :

GinnyAnswer
To determine what percentage of Sonja's payments have gone toward paying interest, we need to analyze her credit card record. Specifically, we'll look at the total amount of payments received and the total amount of finance charges over the 7-month period.

Here's a step-by-step breakdown:

1. Total Payments Received:
We sum up the amounts listed under "Payment received" for each month:
[tex]\[ \$14.00 + \$13.97 + \$13.93 + \$13.90 + \$13.86 + \$13.83 = \$83.49 \][/tex]

2. Total Finance Charges:
We sum up the amounts listed under "Finance charges" for each month:
[tex]\[ \$12.25 + \$12.22 + \$12.19 + \$12.16 + \$12.13 + \$12.10 = \$73.05 \][/tex]

3. Percentage of Payments Going to Interest:
We calculate the percentage of the total payments that have gone towards finance charges:
[tex]\[ \left( \frac{\$73.05}{\$83.49} \right) \times 100 \approx 87.49550844412505\% \][/tex]

Hence, we find that approximately [tex]\( 87\% \)[/tex] of Sonja's payments have gone towards paying interest.

Therefore, the correct answer is:
[tex]\[ \text{D. } 87\% \][/tex]

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