For the month of July, the unpaid balance on Sue's credit card statement was $1,131.63 at the beginning of the billing cycle. She made purchases of $512.58. She also made a payment of $750.00 during the month. If the interest rate was 1.75% per month on the unpaid balance, determine the finance charge and the new balance on the first day of the August billing cycle.

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Business

Frankie Bailey

10 July, 10:58

For the month of July, the unpaid balance on Sue's credit card statement was $1,131.63 at the beginning of the billing cycle. She made purchases of $512.58. She also made a payment of $750.00 during the month. If the interest rate was 1.75% per month on the unpaid balance, determine the finance charge and the new balance on the first day of the August billing cycle.

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Valerie Soto · Answer 1

The finance charge is $19.80 and The new balance on the first day of the August billing cycle is $914.01

Explanation:

According to the given data, we have the following:

Sue's credit card statement was $1,131.63 at the beginning of the billing cycle

purchases = $512.58

interest rate=1.75%

Hence, to determine the finance charge we use the equation I=Ptr,

so = ($1,131.63) (1) (0.0175)

=$19.80.

The finance charge is $19.80

Then, She also made a payment of $750.00 during the month, so In order to calculate the new balance on the first day of the August billing cycle we would have to make the following calculation

new balance=old unpaid balance+finance charge+purchases-payment

=$1,131.63+$19.80+$512.58-$750.00

=$914.01

The new balance on the first day of the August billing cycle is $914.01