Question

4. nancy billows bought a $7,000 desk at furniture.com. based on her income, nancy could only afford to pay back $700 per month. the charge on the unpaid balance is 3%. the u.s. rule is used in the calculation. calculate the balance outstanding at the end of month 2.

Answer 1

The computation of the balance outstanding at the end of the month 2 is shown below:

Month Due balance Interest Monthly     Balance       Outstanding

                                                     payment    Reduction     Balance

1            $7,000           $210         $700          $490              $6,510

                        ($7,000 × 3%)                  ($700 - $210)   ($7,000 - $490)

2           $6,510            $195.30    $700          $504.70        $6,005.30

                         ($6,510 × 3%)        ($700 - $195.30)  ($6,510 - $504.70)

Outstanding balance definition :

An outstanding balance is the amount you owe on any debt that charges interest, like a credit card. Most often, it refers to the amount you owe from purchases and other transactions made with your credit card. It's also called your current balance.

Your outstanding balance is what you currently owe on your card and can include:

• Purchases

• Cash advances

• Balance transfers

• Interest charges

• Fees

Card issuers assign specific credit limits (spending limits) on your cards. Your outstanding balance helps determine how much much credit (money left to spend) you have available. To find out how much you have left, simply subtract your outstanding balance from your credit limit. Don't forget to include any charges that haven't shown up on your credit card account yet.

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