Answer:
Determination of the Finance Charge, Carry-over balance, Minimum Payment for each of the next two months:
Finance Charge:
First month = $7.91
Second month = $7.72
Carry-over balance:
First month = $487.59
Second month = $475.50
Minimum Payment:
First month = $20.32
Second month = $19.81
Starting balance (Carry-over balance + Finance charge):
First month = $507.91
Second month = $495.31
Step-by-step explanation:
a) Data and Calculations:
Credit Finance = $500
APR = 18.99%
Minimum monthly payment = 4% of the balance
Monthly rate of interest = 0.1899/12 = 0.015825
Finance Charge:
First month = $7.91 ($500 * 0.015825)
Second month = $7.72 ($487.59 * 0.015825)
Carry-over balance:
First month = $487.59($507.91 - $20.32)
Second month = $475.50 ($495.31 - $19.81)
Minimum Payment:
First month = $20.32 ($507.91 * 4%)
Second month = $19.81 ($495.31 * 4%)
Starting balance (Carry-over balance + Finance charge):
First month = $507.91 ($500 + $7.91)
Second month = $495.31 ($487.59 + $7.72)
