Use the formula $I = P r t$ to reach a solution for the following problem.
One month a credit card company charged $9.27 in interest on a balance of $3,708 . What annual interest rate is the credit card company charging?
A) 5%
B) 3.5%
C) 2%
D) 3%
E) none of these

Question

Quizplus · Accepted Answer

We know that:

- I (interest) = $9.27
- P (balance) = $3,708
- t (time) = 1 month (since we want the annual interest rate, we need to convert this to a yearly time frame)
- r (interest rate) = ?

To solve for r, we first need to convert t to years. Since there are 12 months in a year, we can divide t by 12 to get:

t = 1/12 years

Now we can plug in the values we know into the formula and solve for r:

I = P r t

$9.27 = $3,708 r (1/12)

r = $9.27 / ($3,708 * 1/12)

r = 0.03 or 3%

Therefore, the credit card company is charging an annual interest rate of 3%. The answer is D.

Use the Formula I=PrtI = P r tI=Prt To Reach a Solution for the Following Problem

Use the Formula $I = P r t$ To Reach a Solution for the Following Problem