Math Question

Question

An oil company wants to drop the effective rate of interest on its credit card by 2.2%. If it currently charges a periodic rate of 1.20% per month, at what amount should it set the periodic rate? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Answer 1

Based on the information given, the answer is

 

New rate = Old rate - (old rate times discount)

 

New rate = 1.2% - ( 1.2% x 2.2% )

 

New rate = 0.012 - (0.012 x 0.022)

 

New rate = 0.012 - 0.000264

 

New rate = 0.011736 = 1.1736% which rounds to 1.17%