You owe $2,875.59 on a credit card at a 13.7% APR. If you pay $400.00/month, what is the difference in the amount of interest accrued by the end of the month if you pay at the beginning of the month versus the end of the month?
To calculate the difference in the amount of interest accrued by the end of the month depending on when the payment is made, we first need to determine the daily interest rate:
Daily interest rate = APR / 365
Daily interest rate = 13.7% / 365
Daily interest rate = 0.00037534
Now, we calculate the interest accrued by the end of the month if the payment is made at the beginning of the month:
Remaining balance after payment = $2,875.59 - $400.00 = $2,475.59
Interest accrued by the end of the month = $2,475.59 * 0.00037534 * 30 = $2.95
Next, we calculate the interest accrued by the end of the month if the payment is made at the end of the month:
Remaining balance after interest accrual = $2,875.59 * 0.00037534 * 30 = $4.14
Interest accrued by the end of the month = $2,875.59 - $400.00 + $4.14 = $2,479.73
Therefore, the difference in the amount of interest accrued by the end of the month if you pay at the beginning of the month versus the end of the month is $2.73.