The account balance on April 1st is $60.15. On April 15th a payment of $51.00 is made. On April 25th a purchase of $91.27 is made. What is the finance charge if the annual rate is 18%? What is the new account balance? (Use the unpaid balance method.) Finance charge = New account balance =

Given : The account balance on April 1st is $60.15. On April 15th a payment of $51.00 is made. On April 25th a purchase of $91.27 is made. The annual rate is 18%.

To find : What is the finance charge and what is his new account balance?

Solution :

Previous balance = $60.15

Payment = $51

We find the unpaid balance,

Unpaid balance = Previous balance - Payments

= $60.15 - $51

Unpaid balance = $9.15

We have given rate of interest= 18%=0.18

Now, we find the finance charge

Finance charge = Finance rate × Unpaid balance

Finance charge = [tex]\frac{0.18}{12} \times 9.15[/tex]

Finance charge = $0.13725

New balance = Unpaid balance + finance charge + new transaction

New balance = $9.15 +$0.13725+ $91.27

New balance =$100.55