Question

score | <500 | 501-650 | 651-750 | 751-850
rate (apr) | 15.75% | 12.5% | 9.25% | 5.75%
use the table to answer the question.
if your credit score is 750, how much will you pay in interest by the end of 1 month if you owe $2,375.00?
(1 point)
○ $31.17
○ $24.74
○ $18.31
○ $11.38

Explanation:

Step1: Determine the APR for score 750

A credit score of 750 falls in the 651 - 750 range, so the APR is 9.25%.

Step2: Convert APR to monthly rate

The monthly interest rate is the APR divided by 12. So, monthly rate $r=\frac{9.25\%}{12}=\frac{0.0925}{12}$.

Step3: Calculate monthly interest

The formula for simple interest for one month is $I = P\times r$, where $P = 2375$ and $r=\frac{0.0925}{12}$.
So, $I=2375\times\frac{0.0925}{12}$.
First, calculate $2375\times0.0925 = 2375\times\frac{925}{10000}=\frac{2375\times925}{10000}=\frac{2197875}{10000}=219.7875$.
Then, divide by 12: $\frac{219.7875}{12}\approx18.31$.

Answer:

$18.31$ (corresponding to the option with $18.31$)