Question

Question 2 1 pts Eden Valley Patio Furniture has the following credit terms: "The finance charge, if any, is based on the previous balance before payments or credits are deducted. The rates are 1.5% per month up to $1,000 and 1.25% per month on amounts in excess of $1,000. These are annual percentage rates of 18% and 15%, respectively. There is no finance charge if the full amount of the new balance is paid within 30 days after the cycle closing date." Compute the finance charge and the new balance for the customer shown below. Assume that the payment was made within the 30-day period. Cycle Previous Finance New Closing Balance Charge Payments Purchases Credits Balance 9:20 $2,009.51 $1,000.00 9788.13 $50.00 Finance charge: $27.62; New balance: $1,775.26 Finance charge: $30.14; New balance: S1,777.78 O Finance charge: $25.12; New balance: $1,772.76

Answer 1

Finance charge=1.5%*1000+1.25%*amount over 1000
=1.5%*1000+1.25%*(2009.51-1000)
=27.618875

New Balance=Balance+Charge-Payment+Purchases-Credits=2009.51+27.618875-1000+788.13-50=1775.258875