Melissa owns a credit card with a 8.9% APR that calculates interest using the ADB excluding new purchases method. The balance after her last billing cycle was $550. What was her finance charge for this credit card last month? Please show your math. Hint: Put your decimal point in the right place. If it’s 0.015555557, then you would multiply by 0.016, and if it’s 0.65555556 then you would multiply by 0.66.

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ApusApus ApusApus · Answer 1 · 2019-09-25T12:19:46+02:00

Answer:

$4.081

Step-by-step explanation:

We have been given that Melissa owns a credit card with a 8.9% APR. The balance after her last billing cycle was $550.

First of all, we will find period rate by dividing APR by 12 as 1 years equals 12 months.

[tex]\text{Period rate}=\frac{8.9\%}{12}=0.74166\%[/tex]

The finance charge would be 0.74166% of $550.

[tex]\text{The finance charge}=\$550\times \frac{0.742}{100}[/tex]

[tex]\text{The finance charge}=\$550\times 0.00742[/tex]

[tex]\text{The finance charge}=\$4.081[/tex]

Therefore, the finance charge would be $4.081.