Question

Arnold Brown has a Visa Card with an annual percentage rate of 18.0%. The unpaid balance for his June billingcycle is $1,085.36. During the billing cycle he purchased a printer cartridge for $41.96, books for $244.36 andgasoline for $16.97. He made a payment of $1,200. If the account applies the unpaid balance method, what arethe finance charge and the new balance?The finance charge is $ The new balance is $(Round to the nearest cent as needed.)

Answer 1

Here is what we know:

The initial unpaid balance was $1085.36

During the billing cycle, be purchased a total of $41.96 + $244.36 + $16.97 = $303.29 in goods

He maid a payment of $1200

Then, since the annual percentage rate is 18.0%, the finance charge is given by:

`1085.36\cdot(0.18)/(12)=\text{ \$16.28}`

Then, the new balance is:

`1085.36+303.29+16.28-1200=\text{ \$}204.93`

Answer:

The new finance charge is $16.28

The new balance is $204.93