Question

Calculate the finance charge and new balance using the previous balance method. Previous balance = $199.19 Annual rate = 14% Finance charge = $ New purchases = $97.50 Payments/credits = $75.75 New balance = $

Answer 1

The finance charge and the new balance is $27.9 and $149.54.

Given information:

Previous balance = $199.19

Annual rate = 14%

Finance charge = $

New purchases = $97.50

Payments/credits = $75.75

New balance = $

Calculation of finance charge & new balance:

Finance charge should be

= 199.19 + (1 + 0.14) - 199.19

= 277.08 - 199.19

= $27.9

Now the new balance should be

= 199.19 - 27.9 - 97.5 + 75.75

= $149.54

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