Question

Lebron has a credit card with a 12.5% APR. His statement balance for the month was $925.34, and he made a payment of $750. What is Lebron's unpaid balance? What is Lebron's periodic rate? What was the finance charge for the month?

Answer 1

Lebron's unpaid balance after making a payment on his credit card is $175.34. His periodic rate, based on a 12.5% APR, is approximately 1.0417% per month. Without specifying how interest is compounded on the remaining balance, the finance charge for the month on the remaining balance would be approximately $1.83 using a simple interest calculation.

Step-by-step explanation:

Lebron's credit card statement shows a balance of $925.34 for the month and he makes a payment of $750. To calculate Lebron's unpaid balance, we subtract the payment amount from the statement balance:

$925.34 - $750 = $175.34

Therefore, Lebron's unpaid balance is $175.34.

The periodic rate is the APR divided by the number of periods in a year. Since APR stands for Annual Percentage Rate, we divide by 12 for the monthly periodic rate:

(12.5% APR) / 12 = 1.0417% per month

The finance charge for the month can be calculated by applying the monthly periodic rate to the unpaid balance. However, the finance charge calculation can depend on the credit card's terms for compounding interest, which are not provided in this problem. Assuming simple interest for this example:

Finance Charge = $175.34 x (1.0417 / 100) = $1.8254 (approximately $1.83)