To find the finance charge based on the given balance and APR, follow these steps:
1. Convert the APR to a decimal
- Given APR: 19.99%
- To convert a percentage to a decimal, divide it by 100.
[tex]\[
\text{APR decimal} = \frac{19.99}{100} = 0.1999
\][/tex]
2. Calculate the monthly interest rate
- To find the monthly interest rate, divide the annual percentage rate (APR) by 12 (since there are 12 months in a year).
[tex]\[
\text{Monthly Interest Rate} = \frac{0.1999}{12} = 0.016658333333333334
\][/tex]
3. Calculate the finance charge
- The finance charge is determined by multiplying the balance by the monthly interest rate.
[tex]\[
\text{Finance Charge} = 5186.59 \times 0.016658333333333334 = 86.39994508333334
\][/tex]
4. Round the finance charge
- Finance charges, like all money values, should be rounded to two decimal places for practical use.
[tex]\[
\text{Finance Charge (rounded)} = 86.40
\][/tex]
Therefore, the finance charge, when rounded to two decimal places, is $86.40.
