A credit card company determines a card holder's minimum monthly payment by adding all new interest to 1.5% of the outstanding principal. The credit card company charges an interest rate of 0.05654% per day. On November 17, a customer used his credit card to pay for the following business expenses: van repairs ($600), equipment maintenance ($433), office supplies ($66), and dinner with clients ($173). Use the given information and the rule that minimum payments are rounded up to the nearest dollar to answer parts a and b below.

Question

A credit card company determines a card holder's minimum monthly payment by adding all new interest to 1.5% of the outstanding principal. The credit card company charges an interest rate of 0.05654% per day. On November 17, a customer used his credit card to pay for the following business expenses: van repairs ($600), equipment maintenance ($433), office supplies ($66), and dinner with clients ($173). Use the given information and the rule that minimum payments are rounded up to the nearest dollar to answer parts a and b below.

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Part 1
a. Assuming the card holder had no new interest, determine his minimum payment due on December 1, his billing date.
What is the card holder's minimum payment due on December 1

Answer 1

To calculate the card holder's minimum payment due on December 1, we need to first calculate the outstanding principal.

The card holder used his credit card to pay for van repairs ($600), equipment maintenance ($433), office supplies ($66), and dinner with clients ($173). So the total expenses were $600 + $433 + $66 + $173 = $1272.

Since the credit card company charges an interest rate of 0.05654% per day, we need to calculate the interest accrued from November 17 to December 1. This is 15 days.

Interest accrued = outstanding principal * interest rate * number of days
= $1272 * 0.05654% * 15
= $108.35

Now we can calculate the minimum payment due.

Minimum payment due = outstanding principal + interest accrued + 1.5% of the outstanding principal
= $1272 + $108.35 + 1.5% * $1272
= $1272 + $108.35 + $19.08
= $1399.43

Since minimum payments are rounded up to the nearest dollar, the card holder's minimum payment due on December 1 is $1400.

Answer 2

To determine the cardholder's minimum payment due on December 1, we need to calculate the outstanding principal amount.

First, let's calculate the total expenses made on November 17:
van repairs: $600
equipment maintenance: $433
office supplies: $66
dinner with clients: $173

Total expenses = $600 + $433 + $66 + $173 = $1272

Next, we need to calculate the outstanding principal amount. This is the remaining balance from previous months' expenses plus the total expenses made on November 17.

Finally, we'll apply the formula provided by the credit card company to calculate the minimum monthly payment:

Minimum payment = (Outstanding principal + New interest) x 1.5%

Since it is mentioned that the cardholder has no new interest, we can exclude the new interest from the calculation. Hence, the formula becomes:

Minimum payment = Outstanding principal x 1.5%

Please provide the remaining balance from previous months' expenses, and we can proceed with the calculation.