Mr X has been enjoying a credit card from ABC Bank. The bank has fixed a spending limit of Rs. 20000

Mr X has been enjoying a credit card from ABC Bank. The bank has fixed a spending limit of Rs. 200000 lac on his card. During July 2016, he made purchase of Rs. 150000 and paid on due date (10 Aug 2016) Rs. 120000 being a part of the outstanding amount of Rs. 150000. On 11 Aug 2016, he made additional purchase of Rs. 70000. Rate of interest charged by bank is 2 % per month. Answer the following questions 01. What would be the minimum payment requirement on credit card dues during any month? a.3% of due b.5% of due c.8% of As due d.10% of due Ans - b Minimum payment require 5% 02. As the bank charges interest at 2% per month, what would be the annual effective rate to the user? a. 24.52% b. 26.82% c. 27.92% d. 28.64% Ans - b Solution Effective interest rate=(1+r)^n-1 =(1+0.02)^12-1 =1.26824-1 =0.26824 =26.82% 03. Daily interest charged on outstanding balance as on 11 Aug 2016 will be ...... a. Rs.60.50 b. Rs.65.75 c. Rs.70.10 d. Rs.75.25 Ans - b Solution Daily interest charged=Due outstanding*12/365*r =(30000+70000)*12/365*0.02 =100000*12*.02/365 =24000/365 =65.75 04. Total interest Charged on 10 Sep 2016 will be ...... a. Rs.1865 b. Rs.1908 c. Rs.1973 d. Rs.2036 Ans - c Solution Total interest charged= no of days outstanding * Daily interest From 11 Jul 2016 to 10 Aug 2016 = 30 days =30*65.75 =1973 05. If Mr A wants to clear all his dues on the due date on 10 Sep 2016, what amount would be required to pay ...... a. Rs.30000 b. Rs.70000 c. Rs.100000 d. Rs.101913 Ans - d Solution outstanding amount+additional purchase+interest =30000+70000+1973 =101973