Question

Assume that you start with a balance of $4000 on your MasterCard. Assume that MasterCard has finance charges of 12% APR and that each month you make only the minimum payment of 5% of the balance. During the first month, you charge $350, and during the second month, you charge $650. Complete the following table. (Round your answers to the nearest cent.)

	Previous balance	Minimum payment	Purchases	Finance charge	New balance
Month 1	$4000.00	$	$	$	$
Month 2	$	$	$	$	$

Answer 1

Ans ;

	Previous Balance	Minimum Payment	Purchase	Finance Charge	New Balance
Month 1	$4,000	$219.50	$350	$ 40	$4170.5
Month 2	$4170.50	$243.11	$650	$41.705	$4619.095

Note 1 : Month One

APR

Finance Charge = Balance * APR / 12
= 4000 * 12% / 12 = $40

Total Balance = Previous Balance + Finance Charge + Purchases
(Befor Min Pyt) = 4000 + 40 + 350
= $ 4390

Minimum Payment = 4390 * 5% = 219.50

New Balance = $4390 - $219.50 = $4170.5

Note 2 : Month 2

Finance Charge = Balance * APR / 12
= 4170.5 * 12% / 12 = $41.705

Total Balance = Previous Balance + Finance Charge + Purchases
(Befor Min Pyt) = 4170.5 + 41.705 + 650
= $ 4862.205

Minimum Payment = 4862.205 * 5% = 243.11025

New Balance = $ 4619.095