pdmull77
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Mindy's credit card has an APR of [tex]$15 \%$[/tex], calculated on the previous monthly balance, and Mindy makes a payment of [tex]$\$[/tex] 50[tex]$ every month. Her credit card record for the last 7 months is shown in the table below.

\begin{tabular}{ccccccc}
\hline
\begin{tabular}{c}
End of \\
month
\end{tabular} & \begin{tabular}{c}
Previous \\
balance
\end{tabular} & \begin{tabular}{c}
New \\
charges
\end{tabular} & \begin{tabular}{c}
Payment \\
received
\end{tabular} & \begin{tabular}{c}
Finance \\
charges
\end{tabular} & \begin{tabular}{c}
Principal \\
paid
\end{tabular} & \begin{tabular}{c}
New \\
balance
\end{tabular} \\
\hline
1 & $[/tex]\[tex]$ 0.00$[/tex] & [tex]$\$[/tex] 45.00[tex]$ & $[/tex]\[tex]$ 0.00$[/tex] & [tex]$\$[/tex] 0.00[tex]$ & $[/tex]\[tex]$ 0.00$[/tex] & [tex]$\$[/tex] 45.00[tex]$ \\
2 & $[/tex]\[tex]$ 45.00$[/tex] & [tex]$\$[/tex] 193.00[tex]$ & $[/tex]\[tex]$ 50.00$[/tex] & [tex]$?$[/tex] & [tex]$\$[/tex] 49.44[tex]$ & $[/tex]\[tex]$ 188.56$[/tex] \\
3 & [tex]$\$[/tex] 168.56[tex]$ & $[/tex]\[tex]$ 90.00$[/tex] & [tex]$\$[/tex] 50.00[tex]$ & $[/tex]\[tex]$ 2.36$[/tex] & [tex]$\$[/tex] 47.64[tex]$ & $[/tex]\[tex]$ 230.92$[/tex] \\
4 & [tex]$\$[/tex] 230.92[tex]$ & $[/tex]\[tex]$ 77.00$[/tex] & [tex]$\$[/tex] 50.00[tex]$ & $[/tex]\[tex]$ 2.89$[/tex] & [tex]$\$[/tex] 47.11[tex]$ & $[/tex]\[tex]$ 260.81$[/tex] \\
5 & [tex]$\$[/tex] 260.81[tex]$ & $[/tex]\[tex]$ 38.00$[/tex] & [tex]$\$[/tex] 50.00[tex]$ & $[/tex]\[tex]$ 3.26$[/tex] & [tex]$\$[/tex] 46.74[tex]$ & $[/tex]\[tex]$ 252.07$[/tex] \\
6 & [tex]$\$[/tex] 252.07[tex]$ & $[/tex]\[tex]$ 227.00$[/tex] & [tex]$\$[/tex] 50.00[tex]$ & $[/tex]\[tex]$ 3.15$[/tex] & [tex]$\$[/tex] 46.85[tex]$ & $[/tex]\[tex]$ 432.22$[/tex] \\
7 & [tex]$\$[/tex] 432.22[tex]$ & $[/tex]\[tex]$ 88.00$[/tex] & [tex]$\$[/tex] 50.00[tex]$ & $[/tex]\[tex]$ 5.40$[/tex] & [tex]$\$[/tex] 44.60[tex]$ & $[/tex]\[tex]$ 475.62$[/tex] \\
\hline
\end{tabular}

What were the finance charges in month 2?

A. [tex]$\$[/tex] 0.56[tex]$
B. $[/tex]\[tex]$ 0$[/tex]
C. [tex]$\$[/tex] 3.26[tex]$
D. $[/tex]\[tex]$ 0.78$[/tex]



Answer :

GinnyAnswer
To determine the finance charges in month 2, we need to use the given Annual Percentage Rate (APR) of 15% and calculate the monthly finance charge based on the previous balance.

Here's the process step-by-step:

1. Identify the previous balance at the end of month 1:
- Previous balance: \[tex]$45.00 2. Calculate the monthly interest rate: - APR is 15% annually. - Monthly interest rate = \(\frac{15\%}{12} = 1.25\%\) 3. Calculate the finance charges: - Finance charges = Previous balance \(\times\) Monthly interest rate - Finance charges = \$[/tex]45.00 [tex]\(\times\)[/tex] 0.0125
- Finance charges = \[tex]$0.5625 4. Round the result to the nearest cent: - Finance charges = \$[/tex]0.56

Therefore, the finance charges in month 2 are \[tex]$0.56. The correct answer is: A. \$[/tex]0.56

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