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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.

[tex]\[
\begin{array}{ccccccc}
\hline
\text{Month} & \text{Previous Balance} & \text{New Charges} & \text{Payment Received} & \text{Finance Charges} & \text{Principal Paid} & \text{New Balance} \\
\hline
1 & \$0.00 & \$700.00 & \$0.00 & \$0.00 & \$0.00 & \$700.00 \\
2 & \$700.00 & \$0.00 & \$14.00 & \$12.25 & \$1.75 & \$698.25 \\
3 & \$698.25 & \$0.00 & \$13.97 & \$12.22 & \$1.75 & \$696.50 \\
4 & \$696.50 & \$0.00 & \$13.93 & \$12.19 & \$1.74 & \$694.76 \\
5 & \$694.76 & \$0.00 & \$13.90 & \$12.16 & \$1.74 & \$693.03 \\
6 & \$693.03 & \$0.00 & \$13.86 & \$12.13 & \$1.73 & \$691.29 \\
7 & \$691.29 & \$0.00 & \$13.83 & \$12.10 & \$1.73 & \$689.57 \\
\hline
\end{array}
\][/tex]

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 the percentage of Sonja's payments that have gone towards paying interest, we need to follow these steps systematically:

1. Identify the Total Finance Charges:
According to the table, the finance charges over the 7 months are as follows:
- Month 1: [tex]$0.00 - Month 2: $[/tex]12.25
- Month 3: [tex]$12.22 - Month 4: $[/tex]12.19
- Month 5: [tex]$12.16 - Month 6: $[/tex]12.13
- Month 7: [tex]$12.10 Summing up these charges: \[ 0.00 + 12.25 + 12.22 + 12.19 + 12.16 + 12.13 + 12.10 = 73.05 \] So, the total finance charges are \$[/tex]73.05.

2. Identify the Total Payments Received:
According to the table, the payments Sonja made are:
- Month 1: [tex]$0.00 - Month 2: $[/tex]14.00
- Month 3: [tex]$13.97 - Month 4: $[/tex]13.93
- Month 5: [tex]$13.90 - Month 6: $[/tex]13.86
- Month 7: [tex]$13.83 Summing up these payments: \[ 0.00 + 14.00 + 13.97 + 13.93 + 13.90 + 13.86 + 13.83 = 83.49 \] So, the total payments received are \$[/tex]83.49.

3. Calculate the Percentage of Payments that Went to Paying Interest:
To find this percentage, we use the formula:
[tex]\[ \text{Interest Percentage} = \left( \frac{\text{Total Finance Charges}}{\text{Total Payments Received}} \right) \times 100 \][/tex]
Substituting the values, we get:
[tex]\[ \left( \frac{73.05}{83.49} \right) \times 100 \approx 87.50\% \][/tex]

Thus, approximately 87.50% of Sonja's payments have gone towards paying interest. The closest answer choice is:
D. [tex]$87\%$[/tex]

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