Question

Suppose your Visa card charges 22% of your previous balance of $650 in response to which you made a payment of $250. You then charged $175. What is the finance charge for the month?

A. $15.95
B. $23.00
C. $29.25
D. $36.50

Answer 1

To calculate the finance charge for the month, we need to calculate the interest on the previous balance and the interest on the new charge. The total finance charge for the month is $181.50.

Step-by-step explanation:

To calculate the finance charge for the month, we need to calculate the interest on the previous balance and the interest on the new charge.

First, let's calculate the interest on the previous balance. Since the previous balance is $650 and the interest rate is 22%, the finance charge for the previous balance is $650 * 0.22 = $143.

Next, let's calculate the interest on the new charge. Since the new charge is $175 and the interest rate is 22%, the finance charge for the new charge is $175 * 0.22 = $38.50.

Finally, the total finance charge for the month is the sum of the finance charge for the previous balance and the finance charge for the new charge, which is $143 + $38.50 = $181.50.

Therefore, the correct answer is D. $36.50.