Question

Determine the finance charge using the previous balance method. The account balance on April 1st is $50.51. On April 15th, a payment of $15.00 is made. On April 25th, a purchase of $19.27 is made. What is the finance charge if the annual rate is 18%?

Answer 1

Answer:

$0.7577

Explanation:

The computation of the finance charge is shown below:

Finance charge =  The account balance × monthly rate

where,

The account balance = $50.51

Monthly rate = 18% ÷ 12 months = 0.015

So, the finance charge is

= $50.51 × 0.015

= $0.7577

We simply multiplied the account balance with the monthly rate so that the finance charge could come

All other information is not relevant. Hence, ignored it