I really need help with these three questions. Thank You.
1. Calculate the finance charge and new balance using the previous balance method.
Previous balance = $179.32
Annual rate = 16%
Finance charge $ ?
New purchases = $117.42
Payments/credits = $85.00
New balance = $ ?
2. Calculate the unpaid balance, finance charge, and the new balance using the unpaid balance method.
Note: interest rate given as a monthly rate.
Previous balance = $179.32
Payments/credits = $85.00
Unpaid balance = $ ?
Monthly rate = 1.25%
Finance charge = $ ?
New purchases = 117.42
New balance = $ ?
3. Based on the information below, choose the correct answers:
Note: The monthly loan payment was calculated at 119 payments of $330.38 plus a final payment of $ $329.73.
Loan Balance: $ 25,000.00
Loan Interest Rate: 10.0%
Monthly Loan Payment: $330.38
Number Of Payments: 120
Cumulative payments: $39,644.95
Total Interest Paid: $ 14,644.95
On average, what dollar amount of each monthly payment is interest ? $116.04, $122.04 or $119.04 ?
What percent of the total payments is total interest? 36.9%, 35.9% or 34.9% ?
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1. To calculate the finance charge and new balance using the previous balance method, follow these steps:
Step 1: Calculate the finance charge
Finance charge = Previous balance x (Annual rate/12)
Given data:
Previous balance = $179.32
Annual rate = 16%
Finance charge = $179.32 x (16%/12)
Finance charge = $23.86
Step 2: Calculate the new balance
New balance = Previous balance + Finance charge + New purchases - Payments/credits
Given data:
New purchases = $117.42
Payments/credits = $85.00
New balance = $179.32 + $23.86 + $117.42 - $85.00
New balance = $235.60
Therefore, the finance charge is $23.86 and the new balance is $235.60.
2. To calculate the unpaid balance, finance charge, and the new balance using the unpaid balance method, follow these steps:
Step 1: Calculate the unpaid balance
Unpaid balance = Previous balance - Payments/credits
Given data:
Previous balance = $179.32
Payments/credits = $85.00
Unpaid balance = $179.32 - $85.00
Unpaid balance = $94.32
Step 2: Calculate the finance charge
Finance charge = Unpaid balance x Monthly rate
Given data:
Monthly rate = 1.25%
Finance charge = $94.32 x (1.25%/100)
Finance charge = $1.18
Step 3: Calculate the new balance
New balance = Unpaid balance + Finance charge + New purchases
Given data:
New purchases = $117.42
New balance = $94.32 + $1.18 + $117.42
New balance = $212.92
Therefore, the unpaid balance is $94.32, the finance charge is $1.18, and the new balance is $212.92.
3. To answer the questions based on the given information:
Question 1: What dollar amount of each monthly payment is interest?
In this case, the monthly loan payment is $330.38, and the total interest paid is $14,644.95. Since there are 119 payments of $330.38 and a final payment of $329.73, the total interest paid per month is the total interest paid divided by the total number of payments.
Total interest paid/Number of payments = $14,644.95/120 = $122.04
Therefore, the dollar amount of each monthly payment that is interest is $122.04.
Question 2: What percent of the total payments is total interest?
To calculate the percent of the total payments that is total interest, divide the total interest paid by the cumulative payments and multiply by 100.
Percent of total payments = (Total interest paid/Cumulative payments) x 100
Percent of total payments = ($14,644.95/$39,644.95) x 100
Percent of total payments = 0.369 x 100
Percent of total payments = 36.9%
Therefore, the percent of the total payments that is total interest is 36.9%.
1. To calculate the finance charge and new balance using the previous balance method, follow these steps:
Step 1: Calculate the finance charge:
- Multiply the previous balance by the annual interest rate. In this case, multiply $179.32 by 16% (which is 0.16).
- Make sure to convert the annual rate to a decimal by dividing it by 100. So, 16% becomes 0.16.
- The calculated finance charge is the product of the previous balance and the annual interest rate.
Step 2: Calculate the new balance:
- Start with the previous balance.
- Add any new purchases to the previous balance.
- Subtract any payments or credits made.
- The resultant amount is the new balance.
Let's apply these steps to the provided values:
- Multiply $179.32 by 0.16 to find the finance charge.
- Add $117.42 to the previous balance.
- Subtract $85.00 from the cumulative balance.
- The result will be the new balance.
2. To calculate the unpaid balance, finance charge, and new balance using the unpaid balance method, follow these steps:
Step 1: Calculate the unpaid balance:
- Start with the previous balance.
- Subtract any payments or credits made.
- The resultant amount is the unpaid balance.
Step 2: Calculate the finance charge:
- Multiply the unpaid balance by the monthly interest rate.
- Convert the monthly interest rate to a decimal by dividing it by 100.
- The product of the unpaid balance and monthly interest rate is the finance charge.
Step 3: Calculate the new balance:
- Start with the unpaid balance.
- Add any new purchases.
- Add the finance charge to the unpaid balance.
- The resultant amount is the new balance.
Let's apply these steps to the provided values:
- Subtract $85.00 from the previous balance to find the unpaid balance.
- Multiply the unpaid balance by 1.25% (0.0125) to find the finance charge.
- Add $117.42 to the unpaid balance.
- Add the finance charge to the unpaid balance to find the new balance.
3. Based on the information given, we can answer the following questions:
- To determine the dollar amount of each monthly payment that is interest, divide the total interest paid by the number of payments. In this case, divide $14,644.95 by 120 payments.
- To calculate what percent of the total payments is the total interest, divide the total interest paid by the cumulative payments and multiply by 100. In this case, divide $14,644.95 by $39,644.95 and multiply by 100.
Following these steps will help you find the answers to the provided questions.