Questions: Last month's balance: 855 Last payment: 170 Annual Interest rate: 21% Purchases: 608 Returns: 192 The finance charge is . (Round to the nearest cent.)

Solution Steps

To find the current month's finance charge using the unpaid balance method, follow these steps:

1. Calculate the unpaid balance by subtracting the last payment from last month's balance.
2. Add any new purchases and subtract any returns to get the adjusted balance.
3. Calculate the monthly interest rate by dividing the annual interest rate by 12.
4. Multiply the adjusted balance by the monthly interest rate to find the finance charge.

The unpaid balance is calculated as follows: \[ \text{Unpaid Balance} = \text{Last Month's Balance} - \text{Last Payment} = 855 - 170 = 685 \]

The adjusted balance is determined by adding purchases and subtracting returns: \[ \text{Adjusted Balance} = \text{Unpaid Balance} + \text{Purchases} - \text{Returns} = 685 + 608 - 192 = 1101 \]

The monthly interest rate is derived from the annual interest rate: \[ \text{Monthly Interest Rate} = \frac{\text{Annual Interest Rate}}{12} = \frac{21}{12} \times \frac{1}{100} \approx 0.0175 \]

The finance charge is calculated by multiplying the adjusted balance by the monthly interest rate: \[ \text{Finance Charge} = \text{Adjusted Balance} \times \text{Monthly Interest Rate} = 1101 \times 0.0175 \approx 19.27 \]

Final Answer