BuyFindarrow_forward

Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447

Solutions

Chapter
Section
BuyFindarrow_forward

Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447
Textbook Problem

The Jewelry Exchange has a $30,000 line of credit with Nations Bank. The annual percentage rate is the current prime rate plus 4.7%. The balance on March I was $8,400. On March 6. the company borrowed $6,900 to pay for a shipment of supplies, and on March 17. it borrowed another $4,500 for equipment repairs. On March 24. a $10,000 payment was made on the account. The billing cycle for March has 31 days. The current prime rate is 9%.

a. What is the finance charge on the account?

b. What is the company's new balance?

c. On April I. how much credit does the Jewelry Exchange have left on the account?

(a)

To determine

To calculate: The finance charge if Jewelry Exchange has a $30,000 line of credit with Nations Bank. The annual percentage rate is calculated as the current prime rate plus 4.7%. On March 1 the balance was $8,400. The company borrowed $6,900 on March 6 to pay for a shipment of supplies, and it borrowed another $4,500 on March 17 for equipment repairs. On March 24, a 10,000 payment was made on the account. The billing cycle for month of March has 31 days. Current prime rate is 9%.

Explanation

Given Information:

Jewelry Exchange has a $30,000 line of credit with Nations Bank. The annual percentage rate is calculated as the current prime rate plus 4.7%. On March 1 the balance was $8,400. The company borrowed $6,900 on March 6 to pay for a shipment of supplies, and it borrowed another $4,500 on March 17 for equipment repairs. On March 24, a 10,000 payment was made on the account. The billing cycle for month of March has 31 days. Current prime rate is 9%.

Formula used:

The average daily balance is computed by dividing the total sum of daily balances by the number of days in a billing cycle.

Average daily balance=Sum of daily balancesdays in billing cycle

The finance charge can be computed by multiplication of the average daily balance with the periodic rate.

Finance Charge=Average daily balance×periodic rate

Calculation:

Consider annual percentage rate is current prime rate plus 4.7%, and prime rate is 9% and previous month’s balance is $8,400.

The annual percentage rate can be computed by adding 4.7% to the prime rate. Substitute the current prime rate to 9%.

Annual percentage rate=Prime rate+4.5%=9%+4.7%=13.7%

Hence, the annual percentage rate is 13.7%.

The periodic rate can be computed by dividing the annual periodic rate by number of months in a year.

Substitute annual percentage rate equals to 13.7% in the below formula;

Periodic rate=Annual percentage rate12=13.7%12=1.14%

Hence, the periodic rate is 1.14%.

Consider that previous balance is $8,400, annual percentage rate is 13.7%. The table showing the transactions is as follows:

Dates

No

(b)

To determine

To calculate: The new balance if Jewelry Exchange has a $30,000 line of credit with Nations Bank. And, the previous month’s balance is $8,400, purchases and cash advance is 11,400, finance charge is 157.14 and payment and credit is 10,000.

(c)

To determine

To calculate: The remaining credit left on the account on April 1, if Jewelry Exchange has a $30,000 line of credit with Nations Bank. And, the new balance is $9,957.14 and credit limit is $30,000.

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Chapter 13 Solutions

Show all chapter solutions add
Sect-13.I P-8RESect-13.I P-9RESect-13.I P-10RESect-13.I P-11RESect-13.I P-12RESect-13.I P-13RESect-13.I P-14RESect-13.I P-15RESect-13.I P-16RESect-13.I P-17RESect-13.I P-18RESect-13.II P-4TIESect-13.II P-5TIESect-13.II P-6TIESect-13.II P-7TIESect-13.II P-8TIESect-13.II P-9TIESect-13.II P-1RESect-13.II P-2RESect-13.II P-3RESect-13.II P-4RESect-13.II P-5RESect-13.II P-6RESect-13.II P-7RESect-13.II P-8RESect-13.II P-9RESect-13.II P-10RESect-13.II P-11RESect-13.II P-12RESect-13.II P-13RESect-13.II P-14RESect-13.II P-15RESect-13.II P-16RESect-13.II P-17RESect-13.II P-18RESect-13.II P-19RESect-13.II P-20RESect-13.II P-21RESect-13.II P-22RESect-13.II P-23RESect-13.II P-24RESect-13.II P-25RESect-13.II P-26RESect-13.II P-27RESect-13.II P-28RESect-13.II P-29RESect-13.II P-30RESect-13.II P-31RESect-13.II P-32RESect-13.II P-33RESect-13.II P-34RESect-13.II P-35RESect-13.II P-36RESect-13.II P-37RESect-13.II P-38RESect-13.II P-39RESect-13.II P-40RESect-13.II P-41RESect-13.II P-42RESect-13.II P-43RESect-13.II P-44RESect-13.II P-45RESect-13.II P-46RESect-13.II P-47RESect-13.II P-48RESect-13.II P-49RESect-13.II P-50RESect-13.II P-51RESect-13.II P-52RESect-13.II P-53RESect-13.II P-54RESect-13.II P-55RECh-13 P-1CRCh-13 P-2CRCh-13 P-3CRCh-13 P-4CRCh-13 P-5CRCh-13 P-6CRCh-13 P-7CRCh-13 P-8CRCh-13 P-9CRCh-13 P-10CRCh-13 P-11CRCh-13 P-12CRCh-13 P-13CRCh-13 P-14CRCh-13 P-1ATCh-13 P-2ATCh-13 P-3ATCh-13 P-4ATCh-13 P-5ATCh-13 P-6ATCh-13 P-7ATCh-13 P-8ATCh-13 P-9ATCh-13 P-10ATCh-13 P-11ATCh-13 P-12ATCh-13 P-13ATCh-13 P-14ATCh-13 P-15AT

Additional Math Solutions

Find more solutions based on key concepts

Show solutions add

Solve the equations in Exercises 112 for x (mentally, if possible). x+5=0

Finite Mathematics and Applied Calculus (MindTap Course List)

Year 2009 2010 2011 Sales, y 887 1028 1251 a. Plot the Cyber Monday sales (y) versus the year (t), where ...

Applied Calculus for the Managerial, Life, and Social Sciences: A Brief Approach

In Exercises 7-10, solve for x or y. (62)2+(2y)2=52

Calculus: An Applied Approach (MindTap Course List)

Graphing Inequalities Graph the inequality. 97. 3x + y 6

Precalculus: Mathematics for Calculus (Standalone Book)

The moment about the xz-plane of solid E whose density is ρ(x, y, z) = x is:

Study Guide for Stewart's Multivariable Calculus, 8th

True or False: dmdv stands for the derivative of the function m with respect to the variable v.

Study Guide for Stewart's Single Variable Calculus: Early Transcendentals, 8th