Go Fly a Kite has a 27500 line of credit which charges an an

Go Fly a Kite has a $27,500 line of credit which charges an annual percentage rate of prime rate plus 3.5%. Their starting balance on April 1 was $7,000. On April 10 they borrowed $5,600. On April 18 the business made a payment of $2,400, and on April 27 they borrowed $3,900. If the current prime rate is 6%, what is the new balance? $

Solution

Starting Balance on April 1 = $7,000

Balance on April 10 = $7,000 + $5,600 = $12,600 ( Since They borrowed, so we add both amount)

Balance on April 18 = $12,600 - $2,400 = $10,200 (We subtract the amount since they made the payment)

Balance of April 27 = $10,200 + $3,900 = $14,100 (Again they borrowed )

So the new balance on April 27 = $14,100 Answer

(Interest rate will be calculated at the end of the month only.)