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Ava goes to the store and chooses clothes and shoes for a new job. The purchases total $200. Ava has a choice: pay with cash or pay with the credit card that gives the discount. How much will Ava save immediately if she uses the credit card and pays the balance during the billing cycle?

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Answer:

How much will Ava save immediately if she uses the credit card and pays the balance during the billing cycle?

$10

 How much will Ava pay in interest if she pays back the card in 11 months? $13.06

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Explanation:

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Using the percentage concept, the discounted amount paid and the interest paid on balance are $10 and $13.06 respectively.

  • Discount given on credit card = 5%
  • Interest rate on balance = 7.5%
  • Total cost of purchase = $200

1.)

The amount saved if Ava pays using her credit card :

  • Discount rate × total cost of purchase

Amount saved = 5% × $200

Amount saved = 0.05 × $200 = $10

2.)

If balance is paid during the billing cycle ;

  • Billing cycle ; time = 11 months

  • Discounted amount = $200 - $10 = $190

Interest paid = Discounted amount × rate × time

Interest paid = ($190 × 7.5% × (11/12))

Interest paid = $190 × 0.075 × 0.91666

Interest paid = $13.0625

Therefore, the interest paid is $13.06

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