Question

edna buys headphones for $150 with a credit card with an annual interest rate of 12%. if they take six months after the grace period to pay off the purchase and the card has a 20 - day grace period, what is the total interest paid on the purchase? formula: total cost = purchase amount + (purchase amount · interest rate)

Explanation:

Step1: Convert annual interest rate to monthly rate

The annual interest rate \( r = 12\%=0.12 \). The monthly interest rate \( i=\frac{r}{12}=\frac{0.12}{12} = 0.01 \).

Step2: Calculate the interest using the simple - interest formula \( I = P\times i\times n \)

The principal amount \( P=\$150 \), the number of months \( n = 6 \), and \( i = 0.01 \).
Substitute the values into the formula: \( I=150\times0.01\times6 \).
First, calculate \( 150\times0.01=\$1.5 \).
Then, \( 1.5\times6=\$9 \).

Answer:

\(\$9\)