Question

How much interest will you have to pay for a credit card balance of $779 that is 1 month overdue, if a 22% annual rate is charged

Answer 1

The general equation is:

$y=P(\frac{r}{12})^{n\cdot12}$

Where:

n = the count in years

P = sum owed = $779

r = rate = 22% = 0.22

In this case, they are only considering 1 month so:

$\begin{gathered} n\times12=1 \\ n\times\frac{12}{12}=\frac{1}{12} \\ n=\frac{1}{12} \end{gathered}$

Therefore, substitute the values we have:

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