Question

Calculate the missing information on the revolving credit account. Interest is calculated on the unpaid or previous month's balance. (Round dollars to the nearest cent.)

Previous Balance	Annual Percentage Rate (APR) (as a %)	Monthly Periodic Rate	Finance Charge (in $)	Purchases and Cash Advances	Payments and Credits	New Balance (in $)
$2,470.00	%	1.25%	$	$1,324.98	$300.00	$

Answer 1

Previous Balance	Anual Percentage Rate (APR)	Monthly Periodic Rate	Finance Charge (in $)	Purchases and Cash Advances	Payments and Credits	New Balance (in $)
$2,470.00	see Step #1	1.25%	see Step #2	$1,324.98	$300.00	see Step #3

Step #1. APR calculation

m = 12 months

Monthly periodic rate = 1.25%

EAR = 1.25% * 12 months = 15%

APR = ( (1+EAR/100)^(1/m) - 1 ) * m * 100

Data is replaces in the formula

APR = ( (1+15/100)^(1/12) - 1) * 12 * 100 = 14.06%

Step #2. Finance Charge (in $)

Previous Balance = $2,470.00

APR = 14.06%

Interest rate to apply on the debt = (14.06% / 360 days) * 30 days = 1.17% monthly

Finance charge = $2,470.00 * 1.17% = $28.94

Sptep #3 New Balance

Previous balance - Finance Charge - Purchases and Cash Advances - Payments and Credits = $2,470.00 + $28.94 + $1,324.98 - $300.00 = $3,523.92