The account balance on April 1st is $60.15. On April 15th a payment of $51.00 is made. On April 25th a purchase of $91.27 is made. What is the finance charge if the annual rate is 18%? What is the new account balance?
Finance charge =_______$
New balance =_______$
Thank you so much for trying it said the answer was...
Finance charge = $ 0.90
New balance = $ 101.32
To calculate the finance charge, we first need to find the average daily balance for the billing cycle. The billing cycle for this scenario is from April 1st to April 30th.
Step 1: Calculate the number of days between April 1st and April 15th (payment date).
Number of days = 15 - 1 = 14 days
Step 2: Calculate the number of days between April 15th (payment date) and April 25th (purchase date).
Number of days = 25 - 15 = 10 days
Step 3: Calculate the number of days between April 26th and April 30th.
Number of days = 30 - 25 = 5 days
Step 4: Determine the average daily balance.
Average daily balance = (balance on April 1st * days) + (balance on April 15th * days) + (balance on April 25th * days) + (balance on April 26th * days) + (balance on April 30th * days) / total number of days in the billing cycle
Using the given information:
Average daily balance = ($60.15 * 14) + ($0 * 10) + ($0 * 5) / 30
Average daily balance = $841.05 / 30
Average daily balance = $28.035
Step 5: Calculate the finance charge.
Finance charge = (average daily balance * annual rate) * (number of days in the billing cycle / number of days in a year)
Finance charge = ($28.035 * 0.18) * (30 / 365)
Finance charge = $0.50463 * 0.08219
Finance charge = $0.041421
The finance charge is approximately $0.04.
Step 6: Calculate the new account balance.
New balance = balance on April 1st + payment made - purchase made + finance charge
New balance = $60.15 - $51.00 - $91.27 + $0.04
New balance = -$82.08
The new account balance is approximately -$82.08.
To calculate the finance charge and the new account balance, we first need to determine the average daily balance for the billing period.
To calculate the average daily balance, we need to find the number of days between April 1st and April 25th, which is 24 days.
Next, we will calculate the average daily balance by adding the balance on April 1st with the balance on April 15th, and dividing it by 2 (assuming no other transactions occurred during this period).
April 1st balance: $60.15
April 15th balance: $60.15 - $51.00 = $9.15
Average Daily Balance = (60.15 + 9.15) / 2 = $34.65
Now, we can calculate the finance charge using the formula: Finance charge = Average Daily Balance * (Annual Rate/365) * Number of Days.
Annual Rate = 18%
Number of Days = 24
Finance charge = $34.65 * (0.18/365) * 24 = $0.43
Therefore, the finance charge is $0.43.
To calculate the new account balance, we need to subtract the purchase of $91.27 and add the finance charge of $0.43 to the balance on April 25th.
April 25th balance: $60.15 - $51.00 - $91.27 = -$82.12
New Account Balance = -$82.12 + $0.43 = -$81.69
Therefore, the new account balance is -$81.69.
We find the unpaid balance,
Unpaid balance = Previous balance- Payments= $60.15 - $51
Unpaid balance = $9.15
We have given rate of interest= 18%=0.18
Now, we find the finance charge
Finance charge = Finance rate × Unpaid balance
Finance charge = $0.13725
New balance = Unpaid balance + finance charge + new transaction
New balance = $9.15 +$0.13725+ $91.27
New balance =$100.55
Finance charge = $0.13725
New balance =$100.55
Is that what you were looking for?