Question

Marta’s credit card statement lists a previous balance of 759.86, new purchases and 420.78 and payments and credits of 450. Marta’s card company charged an APR of 14% on the adjusted balance. What is Marta’s finance charge

Answer 1

To find Marta's finance charge, first calculate the adjusted balance by adding new purchases to the previous balance and subtracting payments and credits. Then, apply the monthly interest rate, derived from the APR, to the adjusted balance to find the finance charge of approximately $8.52.

Step-by-step explanation:

To calculate Marta's finance charge on her credit card, we need to apply the Annual Percentage Rate (APR) to the adjusted balance.

The adjusted balance is found by subtracting any payments and credits from the previous balance and then adding any new purchases.

First, calculate the adjusted balance:
Previous balance: $759.86
Payments and credits: -$450.00
New purchases: $420.78
Adjusted balance: $759.86 - $450.00 + $420.78 = $730.64

Next, apply the APR to the adjusted balance. The APR of 14% needs to be converted to a monthly rate because finance charges are typically calculated monthly.

Therefore, divide the APR by 12 (the number of months in a year):

Monthly interest rate: 14% / 12 = 1.1667%

Now, calculate the finance charge:
Finance charge: $730.64 * 1.1667% = $8.52

Therefore, Marta's finance charge for the month would be approximately $8.52.