Question

Calculate the finance charge and new balance using the previous balance method. Previous balance = $199.19 Annual rate = 14%

Answer 1

Finance charge = $2.32

new balance = $201.51

Explanation:

Finance charge = Previous balance×Periodic percentage rate

The previous balance is 199.19

The annual percentage rate is 0.14. Therefore, the periodic percentage rate is; (0.14/12)

Finance charge = 199.19 * (0.14/12)

= 2.3239 = $2.32

new balance = previous balance + finance charge

= 199.19 + 2.32

= $201.51