Question

Alexis has a charge card that had a previous balance of $468.94. The periodic rate is 5.50%, and she made new purchases of $294.25. Last month, she made the minimum payment of $62.75 and received a credit of $22.87. Her bank uses the unpaid balance method to compute finance charges. What is her new balance?

a) $676.37
b) $680.29
c) $687.51
d) $695.14

Answer 1

To find Alexis' new balance, calculate the finance charges for the previous balance and new purchases, and then subtract any payments and credits. Finally, subtract the total payments and credits from the total balance to get the new balance.

Step-by-step explanation:

To find Alexis' new balance, we need to calculate the finance charges for her previous balance and new purchases, and then subtract any payments and credits. The finance charges for the previous balance can be calculated using the unpaid balance method, which multiplies the previous balance by the periodic rate. The finance charges for the new purchases can be calculated by multiplying the new purchases by the periodic rate. After calculating the finance charges, we add them to the previous balance and new purchases to get the total balance. Finally, we subtract any payments and credits to get the new balance.

Previous balance: $468.94

New purchases: $294.25

Periodic rate: 5.50%

Minimum payment: $62.75

Credit: $22.87

Finance charges for previous balance: $468.94 * 0.0550 = $25.79

Finance charges for new purchases: $294.25 * 0.0550 = $16.18

Total balance: $468.94 + $294.25 + $25.79 + $16.18 = $805.16

New balance: $805.16 - $62.75 - $22.87 = $719.54