Your bank card has an APR of 21% and there is a 3% fee for cash advances.The bank starts charging interest on cash advances immediately.You get a cash advance of $500 on the first day of the month.You get your credit card bill at the end of the month.What is the approximate total finance charge you will pay on this cash advance for the month? Assume each month has 30 days.
A)$15
B)$21
C)$24
D)$0
E)$3

Question

Quizplus · Accepted Answer

The total finance charge includes the immediate 3% fee on the cash advance plus the interest for the month. The 3% fee on $500 is $15. The daily interest rate is 21% APR / 365 days = 0.0575% per day. For 30 days, the interest on $500 is $500 * 0.0575% * 30 = $8.625. Adding the immediate fee of $15 to the interest of approximately $8.63 gives a total finance charge of about $23.63, which rounds to approximately $24.

Your Bank Card Has an APR of 21% and There