Nick has a revolving department store credit card account with an annual percentage rate of 15%.Last month's balance on the account was 423.78.During the current month,he made purchases totaling 123.42 and made a payment of 100.00.The store uses the unpaid balance method.According to this information,what must be the amount of the finance charge.Round to nearest cent.
A.5.30
b.5.59
c.6.36
d.6.71
423.78 + 23.42 = 447.20
447.20 * 0.15 = 67.08
67.08 / 12 = ?
Ms. Sue,
Thank you very much,I cannot believe I was leaving off dividing by 12.
According to the information above would Nicks current account balance be 380.12.
To calculate the finance charge using the unpaid balance method, we need to follow these steps:
1. Start with the previous balance on the account, which is $423.78.
2. Add any new purchases made during the current month. In this case, Nick made purchases of $123.42, so the total balance is now $423.78 + $123.42 = $547.20.
3. Subtract any payment made during the current month. Nick made a payment of $100.00, so the remaining balance is $547.20 - $100.00 = $447.20.
4. Multiply the remaining balance by the annual percentage rate (APR) to find the monthly interest charge. In this case, the APR is 15%, which can be converted to a decimal by dividing by 100: 15 / 100 = 0.15. Multiply this by the remaining balance: $447.20 * 0.15 = $67.08.
5. Round the finance charge to the nearest cent, which in this case would be $67.08 rounded to $67.09.
Therefore, the correct answer is option D. $6.71.