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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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  1. 10 July, 12:59
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    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
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