31. Aaron had an unpaid balance of $1,384.00 on his credit card statement at the

Question

31. Aaron had an unpaid balance of $1,384.00 on his credit card statement at the beginning of January. He made a payment of $480.00 during the month. If the interest rate on Aaron's credit card was 8% per month on the unpaid balance, find the finance charge and the new balance on February 1. A) Finance charge = $120.86; new balance = $1,024.86 B) Finance charge = $108.83; new balance = $1,012.83 C) Finance charge = $110.72; new balance = $1,014.72 D) Finance charge = $114.83; new balance = $1,018.83

Explanation / Answer

here

principal money = unpaid balance = $ 1384

rate of interest = 8% per month = 0.08

time = 1 month (january to february)

interest = p * t * r         here "r" is fractional rate

Finace charged = interest = 1384 * 1 * 0.08

                                          = $ 110.72

he paid $ 480

so the new balance = 1384 + 110.72 - 480 (unpaid balance + Finace charged (interest) - the amount he paid )

                                = $ 1014.72

option c)

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