Question

Peggy andrews has a charge account at davis jewelers, which uses the unpaid-balance method of computing finance charges. the periodic rate is 1.75%. peggy's previous balance is $9,472.08. she had payments and credits of $250.00. her new purchase of $45.00 was not included in the finance charge calculation. what is the new account balance including the new purchase? (hint: calculate finance charge before adding $45.00 to the balance.) $9,428.47 $9,222.08 $9,267.08 $9,429.25

Answer 1

Answer: $9428.47

Explanation:

Given the following :

Periodic rate = 1.75% = 0.0175

Previous balance = $9472.08

Payments and credit = $250

New purchase = $45

Unpaid balance = previous balance - payments and credit

Unpaid balance = $9,472.08 - $250 = $9222.08

Finance charge = unpaid balance × periodic rate

Finance charge= $9222.08 × 0.0175 = $161.3864

New balance = (unpaid balance + finance charge + new purchase)

New balance = $(9222.08 + 161.3864 + 45)

New balance = $9428.4664

New balance = $9,428.47