Question

Gavin’s unpaid credit card balance is $2103.23. His APR is 14.4%.

What is his new balance if he made one new transaction for $390?
$2016.10
$2128.47
$2518.47
$2796.10

Answer 1

Answer: 2518.47

Explanation:

New balance = unpaid balance+ new transactions+finance charge

Step 1.

Calculate the periodic rate= APR/12

14.4% to a decimal is .144

Periodic Rate: .144/12 = 0.012

Step 2.

Calculate the finance charge= Unpaid balance x periodic rate

Finance Charge: 2103.23 x 0.012= 25.23876

Step 3.

Calculate the new balance= unpaid balance+ new transactions+finance charge

New Balance: 2103.23+ 390 + 25.23876= 2518.46876

Answer 2

Option 3 - $2518.47

Explanation:

Given : Gavin’s unpaid credit card balance is $2103.23. His APR is 14.4%.

To find : What is his new balance if he made one new transaction for $390?

Solution :

We have given,

Unpaid balance = $2103.23

APR= 14.4%=0.144

Now, the formula to find finance charge

Finance charge = Finance rate × Unpaid balance

Finance charge =
`(0.144)/(12) * 2103.23`

Finance charge = $25.238

New balance = Unpaid balance + finance charge + new transaction

New balance = $2103.23 +$25.238+ $390

New balance =$2518.468

Therefore, Option 3 is correct.

The new balance is $2518.47.