Tran Charged $ 450 \$450 $450 And Paid $ 150 \$150 $150 Of That In His Billing Cycle. Which Expression Will Find The Amount Of Interest Tran Will Be Charged After The First Month?A. ( 0.01 ) ( $ 300 (0.01)(\$300 ( 0.01 ) ( $300 ] B. ( 0.01 ) ( $ 450 (0.01)(\$450 ( 0.01 ) ( $450 ] C.

Introduction

When it comes to credit card billing cycles, understanding interest charges is crucial to avoid unexpected fees. In this article, we will delve into the concept of interest charges and explore how to calculate the amount of interest charged after the first month.

The Problem

Tran is charged $\$450$ and pays $\$150$ of that in his billing cycle. We need to find the expression that will calculate the amount of interest Tran will be charged after the first month.

Interest Charges: A Brief Overview

Interest charges are fees added to the outstanding balance of a credit card account. These charges are usually calculated as a percentage of the outstanding balance. In this case, we are dealing with a simple interest charge, where the interest is calculated as a percentage of the outstanding balance.

Calculating Interest Charges

To calculate the interest charge, we need to multiply the outstanding balance by the interest rate. The interest rate is usually expressed as a decimal value. For example, if the interest rate is 1%, it can be expressed as 0.01.

Option A: $(0.01)(\$300$

Option A suggests that the interest charge is calculated by multiplying $\$300$ by 0.01. However, this is not the correct approach. The outstanding balance is $\$300$, which is the amount Tran still owes after paying $\$150$.

Option B: $(0.01)(\$450$

Option B suggests that the interest charge is calculated by multiplying $\$450$ by 0.01. However, this is not the correct approach. The interest charge is calculated on the outstanding balance, which is $\$300$, not the initial balance of $\$450$.

The Correct Approach

To calculate the interest charge, we need to multiply the outstanding balance by the interest rate. In this case, the outstanding balance is $\$300$, and the interest rate is 1% or 0.01.

The correct expression to calculate the interest charge is:

$(0.01)(\$300)$

This expression multiplies the outstanding balance of $\$300$ by the interest rate of 0.01, resulting in an interest charge of $\$3$.

Conclusion

In conclusion, the correct expression to calculate the amount of interest Tran will be charged after the first month is $(0.01)(\$300)$. This expression takes into account the outstanding balance and the interest rate, resulting in an accurate calculation of the interest charge.

Key Takeaways

• Interest charges are fees added to the outstanding balance of a credit card account.
• The interest charge is calculated by multiplying the outstanding balance by the interest rate.
• The correct expression to calculate the interest charge is $(0.01)(\$300)$.

Frequently Asked Questions

Q: What is the interest rate in this scenario?

A: The interest rate is 1% or 0.01.

Q: What is the outstanding balance in this scenario?

A: The outstanding balance is $\$300$.

Q: What is the correct expression to calculate the interest charge?

A: The correct expression is $(0.01)(\$300)$.

Q: What is the result of the correct expression?

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Q&A: Frequently Asked Questions

Q: What is the interest rate in this scenario?

A: The interest rate in this scenario is 1% or 0.01. This means that for every $\$100$ in outstanding balance, Tran will be charged $\$1$ in interest.

Q: What is the outstanding balance in this scenario?

A: The outstanding balance in this scenario is $\$300$. This is the amount that Tran still owes after paying $\$150$ of the initial balance of $\$450$.

Q: What is the correct expression to calculate the interest charge?

A: The correct expression to calculate the interest charge is $(0.01)(\$300)$. This expression multiplies the outstanding balance of $\$300$ by the interest rate of 0.01, resulting in an interest charge of $\$3$.

Q: What is the result of the correct expression?

A: The result of the correct expression is an interest charge of $\$3$. This means that Tran will be charged $\$3$ in interest after the first month.

Q: How does the interest charge affect the outstanding balance?

A: The interest charge is added to the outstanding balance, resulting in a new outstanding balance. In this case, the new outstanding balance would be $\$300$ (initial outstanding balance) + $\$3$ (interest charge) = $\$303$.

Q: What happens if the interest rate changes?

A: If the interest rate changes, the interest charge will also change. For example, if the interest rate increases to 2% or 0.02, the interest charge would be $(0.02)(\$300)$ = $\$6$. This means that Tran would be charged $\$6$ in interest after the first month.

Q: Can the interest charge be avoided?

A: Yes, the interest charge can be avoided by paying the outstanding balance in full before the end of the billing cycle. This means that Tran would need to pay the entire $\$450$ balance before the end of the billing cycle to avoid the interest charge.

Q: What is the difference between simple interest and compound interest?

A: Simple interest is calculated as a percentage of the outstanding balance, while compound interest is calculated as a percentage of the outstanding balance plus any accrued interest. In this scenario, we are dealing with simple interest.

Q: How can I calculate the interest charge for a credit card with a variable interest rate?

A: To calculate the interest charge for a credit card with a variable interest rate, you will need to know the current interest rate and the outstanding balance. You can then use the formula: Interest Charge = (Interest Rate)(Outstanding Balance) to calculate the interest charge.

Q: Can I use a credit card interest calculator to calculate the interest charge?

A: Yes, you can use a credit card interest calculator to calculate the interest charge. These calculators can take into account the interest rate, outstanding balance, and other factors to provide an accurate calculation of the interest charge.

Conclusion

In conclusion, understanding interest charges is crucial to avoid unexpected fees. By knowing the interest rate, outstanding balance, and correct expression to calculate the interest charge, you can make informed decisions about your credit card usage. Remember to always pay your balance in full before the end of the billing cycle to avoid the interest charge.