Right or Wrong? Suppose that you receive a credit card bill on December 1 for $1,050. You mail in a payment of $650 the same day, and it is received in 7 days. If the interest is charged at 15% APR and is calculated according to the adjusted balance method, the amount of interest is $$\begin{array} { l }
I = \text { Prt } \
= \$ 1,050 ( 0.15 ) \left( \frac { 1 } { 12 } \right) \
= \$ 13.125
\end{array}$$ or (to the nearest cent) $13.13
A) Wrong
B) Right

Question

Right or Wrong? Suppose that you receive a credit card bill on December 1 for $1,050. You mail in a payment of $650 the same day, and it is received in 7 days. If the interest is charged at 15% APR and is calculated according to the adjusted balance method, the amount of interest is $$\begin{array} { l } 
I = \text { Prt } \
= \$ 1,050 ( 0.15 ) \left( \frac { 1 } { 12 } \right) \
= \$ 13.125
\end{array}$$ or (to the nearest cent) $13.13
A) Wrong
B) Right

Quizplus · Accepted Answer

The calculation incorrectly applies the interest to the original balance before the payment was received. With the adjusted balance method, interest should be calculated on the balance after the payment is subtracted, which would be $400, not $1,050.

Right or Wrong? Suppose That You Receive a Credit Card I= Prt =$1,050(0.15)(112)=$13.125\begin{array} { l } I = \text { Prt } \\= \$ 1,050 ( 0.15 ) \left( \frac { 1 } { 12 } \right) \\= \$ 13.125\end{array}I= Prt =$1,050(0.15)(121​)=$13.125​

Right or Wrong? Suppose That You Receive a Credit Card $\begin{array} { l } I = \text { Prt } \\= \$ 1,050 ( 0.15 ) \left( \frac { 1 } { 12 } \right) \\= \$ 13.125\end{array}$