Chapter 13.I, Problem 1TIE

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8th Edition

Robert Brechner + 1 other

ISBN: 9781305585447

Textbook Problem

Mike Dennis has a Bank of America account with an annual percentage rate of 15%. His previous month’s balance is $214.90. During July, Mike’s account showed the following activity.

What is the finance charge for July, and what is Mike’s new balance?

To determine

**To calculate:** The finance charge and new balance if Mike Dennis has a Bank of America account with the previous month balance is

Explanation

**Given Information:**

Mike Dennis has a Bank of America account with the previous month balance is

Dates |
Activity |
Amount ($) |

July |
Royal cleaners | |

July |
Payment | |

July |
Macy’s | |

July |
Antonio’s restaurant | |

July |
CVS pharmacy | |

July |
CVS pharmacy (credit) |

**Formula used:**

Follow the steps to determine finance charge and new balance through unpaid balance method:

Step 1: The formula for the monthly periodic rate is computed by dividing the annual percentage rate by the number of months in a year.

Step

Step

**Calculation:**

The formula for the periodic rate is computed by dividing the annual percentage rate by the number of months in a year.

Substitute the annual percentage rate by

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