Question

Sarah has a balance of $6,850 on her credit card. If the card has an annual rate of 28.39%, how much is the finance charge for this month?

Answer 1

Answer: $162.05 is the finance charge for this month

Explanation:

Hi, to answer this question, first, we have to divide the annual rate ( 28.39%) by 12, since a year has 12 months , and we want to calculate the charge for this month.

28.39% / 12 = 2.36% is the monthly rate =0.0236 (in decimal form, 2.36/100=0.0236)

Now, we have to multiply the monthly rate by the amount of the balance:

6,850 x 0.0236 =$162.05 is the finance charge for this month

Feel free to ask for more if needed or if you did not understand something.

Answer 2

The finance charge for this month is $162.06

Explanation:

Hi

First of all, as we have the interest rate of a year
`i_(y)=28.39\%`, but we need the monthly rate of interest, so
`i_(m)=(i_(y))/(12)=(28.39\%)/(12) =2.36\%=0.0236`.

Then we can compute how much is the finance charge for this month, hence
`I=\$ 6,850(0.0236)=\$ 162.06`