4
QuizMultiple Choice

Using Graphs to Advertise — Cumulative exam

Question 4 • FowU - Financial Math - B

Natasha had a $922.93 balance on her credit card at the beginning of September. Her credit card has an APR of 9.89%, compounded monthly, and a minimum monthly payment of 3.08% of the total balance. The following table shows Natasha’s credit card purchases over the next two months. Month Cost ($) September 33.70 October 61.70 October 27.80 If Natasha makes only the minimum payments, what will her balance at the beginning of November? (Assume that the interest accrues before the monthly payment, and that the monthly payment occurs at the end of the month. Round all dollar values to the nearest cent.)

Answer
A
$1,180.48
B
$1,064.55
C
$1,000.93
D
$1,123.97

Explanation

The monthly interest rate is 9.89% ÷ 12 = 0.82417%. For September, add the $33.70 purchase to $922.93, apply interest, then subtract the 3.08% minimum payment: $956.63 × 1.00824167 = $964.51, and $964.51 − $29.71 = $934.80. For October, add $61.70 and $27.80, apply interest, and subtract the minimum payment: $1,024.30 × 1.00824167 = $1,032.74, then $1,032.74 − $31.81 = $1,000.93. The balance is $1,000.93, choice C.

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