elizabeths credit card computes her finance charges using the previous balance method and a 30 - day billing…

elizabeths credit card computes her finance charges using the previous balance method and a 30 - day billing cycle. the table below shows elizabeths credit card transactions in july.\n| date | amount ($) | transaction |\n| ---- | ---- | ---- |\n| 7/1 | 969.26 | beginning balance |\n| 7/3 | 45.00 | payment |\n| 7/10 | 67.48 | purchase |\n| 7/12 | 20.00 | payment |\n| 7/28 | 85.00 | payment |\nif elizabeth has an apr of 14.61%, how much will her july finance charge be?\na. $9.97\nb. $12.62\nc. $11.80\nd. $10.80

elizabeths credit card computes her finance charges using the previous balance method and a 30 - day billing cycle. the table below shows elizabeths credit card transactions in july.\n| date | amount ($) | transaction |\n| ---- | ---- | ---- |\n| 7/1 | 969.26 | beginning balance |\n| 7/3 | 45.00 | payment |\n| 7/10 | 67.48 | purchase |\n| 7/12 | 20.00 | payment |\n| 7/28 | 85.00 | payment |\nif elizabeth has an apr of 14.61%, how much will her july finance charge be?\na. $9.97\nb. $12.62\nc. $11.80\nd. $10.80

Answer

Explanation:

Step1: Recall finance - charge formula

The finance - charge formula using the previous - balance method is $Finance\ Charge = Previous\ Balance\times\frac{APR}{12}$.

Step2: Identify previous balance

The previous balance is the beginning balance on 7/1, which is $969.26$.

Step3: Convert APR to monthly rate

The APR is $14.61%=0.1461$. The monthly rate $r=\frac{0.1461}{12}$.

Step4: Calculate finance charge

$Finance\ Charge = 969.26\times\frac{0.1461}{12}$ $Finance\ Charge=969.26\times0.012175\approx11.80$

Answer:

c. $$11.80$