Answered

Jeremiah's credit card has an APR of [tex]22 \%[/tex] calculated on the previous monthly balance. His credit card record for the last 7 months is shown in the table below.

\begin{tabular}{ccccccc}
\hline \begin{tabular}{c}
End of \\
Month
\end{tabular} & \begin{tabular}{c}
Previous \\
Balance
\end{tabular} & \begin{tabular}{c}
New \\
Charges
\end{tabular} & \begin{tabular}{c}
Payment \\
Received
\end{tabular} & \begin{tabular}{c}
Finance \\
Charges
\end{tabular} & \begin{tabular}{c}
Principal \\
Paid
\end{tabular} & \begin{tabular}{c}
New \\
Balance
\end{tabular} \\
\hline
1 & \[tex]$0.00 & \$[/tex]255.87 & \[tex]$0.00 & \$[/tex]0.00 & \[tex]$0.00 & \$[/tex]255.87 \\
2 & \[tex]$255.87 & \$[/tex]156.83 & \[tex]$120.00 & \$[/tex]4.69 & \[tex]$115.31 & \$[/tex]297.39 \\
3 & \[tex]$297.39 & \$[/tex]96.96 & \[tex]$80.00 & \$[/tex]5.45 & \[tex]$74.55 & \$[/tex]319.80 \\
4 & \[tex]$319.80 & \$[/tex]133.05 & \[tex]$140.00 & \$[/tex]5.86 & \[tex]$134.14 & \$[/tex]318.72 \\
5 & \[tex]$318.72 & \$[/tex]267.42 & \[tex]$60.00 & \$[/tex]5.84 & \[tex]$54.16 & \$[/tex]531.98 \\
6 & \[tex]$531.98 & \$[/tex]78.91 & \[tex]$160.00 & \$[/tex]9.75 & \[tex]$150.25 & \$[/tex]460.64 \\
7 & \[tex]$460.64 & \$[/tex]301.48 & \[tex]$220.00 & \$[/tex]8.45 & \[tex]$211.55 & \$[/tex]550.57 \\
\hline
\end{tabular}

On what amount of money will Jeremiah be charged interest for month 8?

A. \$220.00
B. \$460.64
C. \$550.57
D. \$301.48



Answer :

GinnyAnswer
To determine the amount of money on which Jeremiah will be charged interest for month 8, we need to understand the system of calculating interest. Interest is typically calculated based on the previous month's balance.

Given the table, here is a summary of the transactions for month 7:

- Previous Balance: \$460.64
- New Charges: \$301.48
- Payment Received: \$220.00
- Finance Charges: \$8.45
- Principal Paid: \$211.55
- New Balance: \$550.57

To find the answer, we need to focus on the "New Balance" at the end of month 7, because this balance is what will be carried over into month 8 and used to calculate the interest.

So, Jeremiah will be charged interest on the "New Balance" at the end of month 7, which is:

C. \$550.57