Question

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.)
a.
$1,180.48
b.
$1,064.55
c.
$1,000.93
d.
$1,123.97



Please select the best answer from the choices provided


A
B
C
D

Answer 1

Monthly rate = 9.89%/12 = 0.0082416667.

September:
- Start 922.93 + purchase 33.70 = 956.63
- Interest = 956.63*(0.0082416667) = 7.884... → $7.88
- Balance before payment = 956.63 + 7.88 = 964.51
- Minimum payment = 964.51*(0.0308) = 29.7069 → $29.71
- Balance at start of October = 964.51 − 29.71 = $934.80

October:
- Start 934.80 + purchases (61.70 + 27.80 = 89.50) = 1,024.30
- Interest = 1,024.30*(0.0082416667) = 8.44194 → $8.44
- Balance before payment = 1,024.30 + 8.44 = 1,032.74
- Minimum payment = 1,032.74*(0.0308) = 31.80839 → $31.81
- Balance at start of November = 1,032.74 − 31.81 = $1,000.93

Answer: C ( $1,000.93 ).