Kathy Hansen has a revolving credit account. The finance charge is calculated on the previous month's balance, and the annual percentage rate is 27%. Complete the account activity table for Kathy. (Round your answers to the nearest cent.) Month April May $ Previous Month's Balance (in $) $642.17 x $ Finance Charge (in $) $14.45 Purchases and Cash Advances $38.45 $287.33 Payments and Credits $85.00 $125.00 New Balance End of Month (in $) $ $610.07
Kathy Hansen has a revolving credit account. The finance charge is calculated on the previous month's balance, and the annual percentage rate is 27%. Complete the account activity table for Kathy. (Round your answers to the nearest cent.) Month April May $ Previous Month's Balance (in $) $642.17 x $ Finance Charge (in $) $14.45 Purchases and Cash Advances $38.45 $287.33 Payments and Credits $85.00 $125.00 New Balance End of Month (in $) $ $610.07
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Kathy Hansen has a revolving credit account. The finance charge is calculated on the previous month’s balance, and the annual percentage rate is 27%. Complete the account activity table for Kathy. (round your answer to the nearest cent.)
![Kathy Hansen has a revolving credit account. The finance charge is calculated on the previous month's balance, and the annual percentage rate is 27%. Complete the account activity table for Kathy. (Round your answers to the nearest cent.)
| Month | Previous Month’s Balance (in $) | Finance Charge (in $) | Purchases and Cash Advances (in $) | Payments and Credits (in $) | New Balance End of Month (in $) |
|-------|----------------------------------|-----------------------|------------------------------------|-----------------------------|-------------------------------|
| April | $642.17 | $14.45 | $38.45 | $85.00 | $610.07 |
| May | $610.07 | [To be calculated] | $287.33 | $125.00 | [To be calculated] |
For May:
- Finance Charge: \(\text{Annual rate} = 27\%\). To find the finance charge for the month, the rate is divided by 12 (months), resulting in a 2.25% monthly rate. Apply this to the April balance (\$610.07):
\[
\text{Finance Charge for May} = \$610.07 \times 0.0225 = \$13.73
\]
Round to the nearest cent.
- New Balance End of Month:
Add the finance charge and purchases to the previous balance, then subtract payments:
\[
\text{New Balance for May} = \$610.07 + \$13.73 + \$287.33 - \$125.00 = \$786.13
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Transcribed Image Text:Kathy Hansen has a revolving credit account. The finance charge is calculated on the previous month's balance, and the annual percentage rate is 27%. Complete the account activity table for Kathy. (Round your answers to the nearest cent.)
| Month | Previous Month’s Balance (in $) | Finance Charge (in $) | Purchases and Cash Advances (in $) | Payments and Credits (in $) | New Balance End of Month (in $) |
|-------|----------------------------------|-----------------------|------------------------------------|-----------------------------|-------------------------------|
| April | $642.17 | $14.45 | $38.45 | $85.00 | $610.07 |
| May | $610.07 | [To be calculated] | $287.33 | $125.00 | [To be calculated] |
For May:
- Finance Charge: \(\text{Annual rate} = 27\%\). To find the finance charge for the month, the rate is divided by 12 (months), resulting in a 2.25% monthly rate. Apply this to the April balance (\$610.07):
\[
\text{Finance Charge for May} = \$610.07 \times 0.0225 = \$13.73
\]
Round to the nearest cent.
- New Balance End of Month:
Add the finance charge and purchases to the previous balance, then subtract payments:
\[
\text{New Balance for May} = \$610.07 + \$13.73 + \$287.33 - \$125.00 = \$786.13
\]
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