Question

You finance a $500 car repair completely on credit and you will just pay the minimum payment each month for the next three months. The APR is 18.99% and the minimum payment each month is 4% of the balance. Determine the finance charge, carry-over balance, and minimum payment required for each of the next two months, and the starting balance for month 2 in the table below.

Round each answer to the nearest cent and do not enter the $ as part of your answer, enter a number only.

Month	Carry-over balance	Finance charge	New balance	Minimum payment
1	$500
2

Answer 1

New balance for month 1 = Starting Balance + Finance Charge = $500 + $7.9125= $507.9125 Minimum Payment for month 1 = $507.9125 * 4% = $20.3165 Starting Balance for month 2 = New balance for month 1 - Minimum Payment for month 1 = $507.9125 - $20.3165= $487.596 Now Finance charges for month 2 = $487.596*1.5825%= $7.716 New balance for month 2 = Starting Balance + Finance Charge = $487.596+ $7.716= $495.312 Minimum Payment for month 2 = $495.312* 4% = $19.81248

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