Chapter 13.I, Problem 7RE

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8th Edition

Robert Brechner + 1 other

ISBN: 9781305585447

Textbook Problem

Anny Winslow has a Bank of America revolving credit account with an annual percentage rate of

a. What is the finance charge?

b. What is Anny's new balance?

**(a)**

To determine

**To calculate:** The finance charge, if annual percentage rate is

Explanation

**Given Information:**

Annual percentage is

Date |
Activity |
Amount ($) |

September |
Previous month’s balance | |

September |
Radio shack | |

September |
Payment | |

September |
Union oil | |

September |
Cash advance | |

September |
Safeway supermarket |

**Formula used:**

Step 1: The average daily balance is computed by dividing the total sum of daily balances by the number of days in a billing cycle.

Step 2: The finance charge is computed by multiplying the balance of the previous month with the monthly periodic rate.

**Calculation:**

Consider that previous balance is

Dates |
Number of days |
Activity/ Amount |
Unpaid balance ($) |
Daily balances ($) |

September |
Previous month balance | |||

September |
Charge |

**(b)**

To determine

**To calculate:** The new balance, if annual percentage rate is

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