Questions: Find the finance charge on an unpaid balance of 1999.40 in a revolving charge account if the monthly interest rate is 1.5%.

Transcript text: Find the finance charge on an unpaid balance of $\$ 1999.40$ in a revolving charge account if the monthly interest rate is $1.5 \%$.

Solution

Solution Steps

To find the finance charge on an unpaid balance, we need to calculate the interest on the balance using the given monthly interest rate. The finance charge can be found by multiplying the unpaid balance by the monthly interest rate (expressed as a decimal).

Step 1: Identify the Given Values

We are given an unpaid balance of $\$1999.40$ and a monthly interest rate of $1.5\%$.

Step 2: Convert the Interest Rate to Decimal

The monthly interest rate needs to be converted from a percentage to a decimal for calculation. This is done by dividing by 100: \[ \text{Monthly Interest Rate} = \frac{1.5}{100} = 0.015 \]

Step 3: Calculate the Finance Charge

The finance charge is calculated by multiplying the unpaid balance by the monthly interest rate: \[ \text{Finance Charge} = 1999.40 \times 0.015 = 29.991 \]

Final Answer

The finance charge on the unpaid balance is $\boxed{29.991}$.

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