Question

you finance a $12,000 condo renovation completely on credit and you will just pay the minimum payment each month for the next few months. The APR is 18.99% and the minimum payment each month is 5% of the balance. Determine the finance charge, carry-over balance, and minimum payment required for each of the next two months, and the starting balance for month 2 in the table below.

Answer 1

Answer:

For Month 1, we have:

Carry-over balance  = $12,000.00

Finance charge = $189.90

New balance = $12,189.90

Minimum payment = $609.50

For Month 2, we have:

Carry-over balance = $11,580.41

Finance charge = $183.26

New balance = $11,763.66  

Minimum payment $588.18

Step-by-step explanation:

Note: This question is not complete. The complete question is therefore provided before answering the question. See the attached pdf file for the complete question.

The explanation to the answer is now given as follows:

Note: See the attached excel file for calculations of the finance charge, carry-over balance, and minimum payment required for each of the next two months.

In the attached excel file, the following formulas are used:

r = Monthly percentage rate = APR / 12 = 18.99% / 12 = 1.5825%

Carry-over balance of the current month = New balance of the previous month - Minimum payment of the previous month

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