Calculate the unpaid balance, finance charge, and new balance using the unpaid balance method.

Question

Note: interest rate is given as a monthly rate.

Previous balance = $179.32

Payments/credits = $85.00

Unpaid balance = $

Monthly rate = 1.25%

Finance charge = $

New purchases = $117.42

New balance = $

Answer 1

To calculate the unpaid balance, finance charge, and new balance using the unpaid balance method, we can follow the steps outlined below:

1. Calculate the Unpaid Balance:

   \[ \text{Unpaid Balance} = \text{Previous Balance} - \text{Payments/Credits} \]

   \[ \text{Unpaid Balance} = 179.32 - 85.00 = 94.32 \]

2. Calculate the Finance Charge:

   To calculate the finance charge, we apply the monthly interest rate to the unpaid balance:

   \[ \text{Finance Charge} = \text{Unpaid Balance} \times \text{Monthly Rate} \]

   \[ \text{Finance Charge} = 94.32 \times 0.0125 = 1.178 \]

   Rounding this to two decimal places, we get:

   \[ \text{Finance Charge} \approx 1.18 \]

3. Calculate the New Balance:

   The new balance is calculated by adding the finance charge to the unpaid balance and then adding any new purchases:

   \[ \text{New Balance} = \text{Unpaid Balance} + \text{Finance Charge} + \text{New Purchases} \]

   \[ \text{New Balance} = 94.32 + 1.18 + 117.42 = 212.92 \]

Summary:

• Unpaid Balance: $94.32
• Finance Charge: $1.18
• New Balance: $212.92

So, the final answers are:

• Unpaid balance = $94.32
• Finance charge = $1.18
• New balance = $212.92