MATH HELP PLEASE ANSWER

Question

A mechanic uses his credit card with a 1.5% monthly interest rate to pay for a compressor that costs $477.95. When he gets his bill, he makes a $100 payment. What is the amount of interest he will be charged on his next statement?

Need answer out of these possible solutions :

A. $5.67
B. $7.17
C. $8.66
D. $12.83

Answer 1

Note: 1.5% = 1.5/100 = 0.015

 

Does the first bill already have a 1.5% interest charge added to it?

I would assume so since he waited for the bill so the bill totals as

477.95+0.015(477.95) = 477.95(1+ 0.015)

 

477.95(1.015) = $485.12

 

On this bill we pay $100 leaving $385.12

 

Interest on $385.12 = 0.015(385.12) = $5.78

 

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Since that doesn't match the answer choices, let's assume

the first bill had no interest on it.

477.95 - 100 = $377.95

 

Interest on 377.95 = 0.015(377.95) = $5.67

 

This matches Answer A

Answer 2

Subtract the payment from the bill (the cost of the compressor). Then calculate the interest on the remaining amount. Convert the 1.5% into a decimal and multiply by the new balance.