Chapter 13.I, Problem 1RE

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8th Edition

Robert Brechner + 1 other

ISBN: 9781305585447

Textbook Problem

Calculate the missing information on the following revolving credit accounts. Interest is calculated on the unpaid or previous month’s balance.

** Annual Monthly Purchases Payments**

**Previous Percentage Periodic Finance and Cash and New**

**Balace Rate (APR) Rate Charge Advances Credits Balance**

**$167.88 18% 1.5% $2.52 $215.50 $50.00 $335.90**

** _____ _____ ________**

To determine

**To calculate:** The monthly periodic rate, finance charge and new balance, if previous balance is

Explanation

**Given Information:**

Previous balance is

**Formula used:**

Follow the steps to compute the finance charge and new balance by using the unpaid balance method:

Step1: The formula of the monthly periodic rate is computed when the annual percentage rate is divided with the number of months in a year that is

Step2: The formula of finance charge is computed when the balance of the previous month is multiplied with the monthly periodic rate.

Step3: The formula of the new balance is computed by adding all previous month balance, finance charge, purchases and cash advances and subtract the total of payments and credits.

**Calculation:**

As,

Compute the monthly periodic rate by substituting

Hence, monthly periodic rate is

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