Question

You have a credit card with an APR of 21.8%. You begin with a balance of $1300, in response to which you make a payment of $300. The first month you make charges amounting to $500. You make a payment of $300 to reduce the new balance, and the second month you charge $600. Complete the following table. (Round your answers to the nearest cent.)

Answer 1

Given that the credit card has an APR of 21.8%=0.218.

The previous balance in the first month is $1300. The payment is $300 and the purchase is equal to $500.

now, we need to find the finance charges by the following formula:

`(APR)/(12)*(PreviousBalance-payments+purchases)`

Substitute the given values in the formula:

`(0.218)/(12)*(1300-300+500)=27.25`

now, the new balance for the first month will be equal to Previous balance-payments+purchases+finance charges

`1300-300+500+27.25=1527.25`

the same calculation goes for the second month. the previous balance for second month is $1527.25. The payment is $300 and the purchase is equal to $600.

The finance charges for the second will be:

`(0.218)/(12)*(1527.25-300+600)=33.20`

So, the new balance for the second month will be

`1527.25-300+600+33.20=1860.45`

Now, you can fill the table your self.