Chase has a $42,500 line of credit which charges an annual percentage rate of prime rate plus 5%. His starting balance on June 1 was $2,550. On June 4, he borrowed $5,300. On June 9, Chris made a payment of $800, and on June 17, he borrowed $5,600. If the current prime rate is 10%, what is his new balance?

Question

Kirsten Khan

Mathematics

4 November, 07:34

Chase has a $42,500 line of credit which charges an annual percentage rate of prime rate plus 5%. His starting balance on June 1 was $2,550. On June 4, he borrowed $5,300. On June 9, Chris made a payment of $800, and on June 17, he borrowed $5,600. If the current prime rate is 10%, what is his new balance?

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Diamond · Answer 1

12,766.83

Step-by-step explanation:

Total interest rate = 10%+5% = 15%

Daily rate = 15%/360 = 0.000417

Balance from June 1 to June 4th = 2550. Interest for this duration = 3 days*0.000417*2550 = 3.1875

Balance from June 4th to June 9th = 2550+5300 = 7850. Interest for this duration = 5 days*0.000417*7850 = 16.3541

Balance from June 9th to June 17th = 7850 - 800 = 7050. Interest for this duration = 8 days*0.000417*7050 = 23.5

Balance from June 17th to June 30th = 7050+5600 = 12650. Interest for this duration = 14 days*0.000417*12650 = 73.7916

Total interest = 3.1875+16.3541+23.5+73.7916 = 116.833

Thus new balance = 12,650+116.833

= 12,766.83