Solve the problem.
-Erica Tomlinsonʹs credit card company determines her minimum monthly payment by adding all New interest to 1% of the outstanding principal. The credit card company charges an interest rate Of 0.04506% per day. On October 15, Erica uses her credit card to purchase a custom set of wheels And tires for her car for $1700. She makes no other purchases or new interest during October. On November 1, instead of making the minimum payment, Erica makes a payment of $500. Assuming there are no additional charges or cash advances, determine Ericaʹs minimum payment Due on December 1.
A) $37
B) $25
C) $29
D) $17

Question

Quizplus · Accepted Answer

First, calculate the daily interest rate applied to the initial amount for the remaining days of October (from October 15 to October 31, which is 17 days). The daily interest rate is 0.04506%, so the total interest for October is $1700 \times 0.0004506 \times 17 = 12.9602$. After Erica makes a payment of $500 on November 1, her outstanding principal is $1700 - 500 = 1200$. For November, the interest for the entire month (assuming 30 days for simplicity) is $1200 \times 0.0004506 \times 30 = 16.2216$. The minimum payment due on December 1 would be the new interest plus 1% of the outstanding principal, which is $16.2216 + (1200 \times 0.01) = 16.2216 + 12 = 28.2216$. Rounding to the nearest dollar gives us $29.

Solve the Problem. -Erica Tomlinsonʹs Credit Card Company Determines Her Minimum Monthly Payment