A certain credit card carries a 10% simple annual interest rate. If Holly missed her payment one month on an unpaid balance of $840 dollars, how much interest will she have to pay?

$7

$8.40

$70

$84

Question

A certain credit card carries a 10% simple annual interest rate. If Holly missed her payment one month on an unpaid balance of $840 dollars, how much interest will she have to pay?

 $7

 $8.40

$70

$84

nurali · Answer

You want to calculate the interest on $840 at 10% interest per year after 1 month. The formula is: 

I = P x r x t 

Where: 

P is the principal amount, $840.00. 

r is the interest rate, 10% per year, or in decimal form, 10/100=0.1. 

t is the time involved, 1 month time periods. 

Since the interest rate is "per year" and the time interval is 1 month, we need to convert your time interval into "year" as well. Do this by dividing your time, 1- month(s), by 12, since there's 12 months in 1 year. 
So, t is 0.0833333....year time periods. 

To find the simple interest, we multiply 840 × 0.1 × 0.0833333 to get that the interest is: $7.00.

anonymous · Answer

Thxx