Calculating Interest on a Credit Card Balance
How can we calculate the interest charged for a billing cycle on a credit card with the previous balance method?
a. (0.15365 * 30)($0.25 * $2480)(365/0.15) b. (0.15365 * 30)($0)(365/0.15) c. (0.15365 * 30)($2480)(365/0.15) d. (0.15365 * 30) (5 * $025 * $24803 / 30) (365/0.15)
Answer:
The correct expression to calculate the interest for the billing cycle is option (c): (0.15365 * 30)($2480)(365/0.15).
Given that Sarah's credit card company uses the previous balance method and her credit card's Annual Percentage Rate (APR) is 15%, we can calculate the interest charged for the billing cycle by using the formula: (APR/365) * Number of days * Balance.
Since Sarah's opening balance for the billing cycle was $2480, but she only carried this balance for the first 5 days before paying it off, we can plug in the values to get the correct expression: (0.15/365 * 5)($2480).
This results in the correct expression: (0.15365 * 30)($2480)(365/0.15) which simplifies to (0.15/365 * 5)($2480). Other options provided are incorrect substitutions in the interest calculation formula.