Question

The account balance on April 1st is $102.33. On April 15th a payment of $25.00 is made. On April 25th a purchase of $11.27 is made. What is the finance charge if the annual rate is 22%? What is the new account balance?

Answer 1

Finance Charge = $1.42

New Account Balance = $90.02

Explanation:

APR (Annual Percentage Rate) = 22%

Periodic Rate = 1.83% (APR/12)

Beginning Balance = $102.33

Payment made on 15th day = $25.00

Purchase made on 25th day = $11.27

Finance Charge = (Beginning Balance - Payment made on 15th day) x Periodic Rate

Finance Charge = ($102.33 - $25.00) x 0.0183

Finance Charge = $77.33 x 0.0183

Finance Charge = $1.42

New Account Balance = Beginning Balance - Payment made on 15th day + Purchase made on 25th day + Finance Charge

New Account Balance = $102.33 - $25.00 + $11.27 + $1.42

New Account Balance = $90.02