Determine the finance charge using the previous balance method. The account balance on April 1st is $50.51. On April 15th, a payment of $15.00 is made. On April 25th, a purchase of $19.27 is made. What is the finance charge if the annual rate is 18%?

$0.7577

Explanation:

The computation of the finance charge is shown below:

Finance charge =  The account balance × monthly rate

where,

The account balance = $50.51

Monthly rate = 18% ÷ 12 months = 0.015

So, the finance charge is

= $50.51 × 0.015

= $0.7577

We simply multiplied the account balance with the monthly rate so that the finance charge could come

All other information is not relevant. Hence, ignored it

correct, but each time you dont pay the price of the penalty can increase.