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Mindy's credit card has an APR of [tex]$15 \%$[/tex], calculated on the previous monthly balance, and Mindy makes a payment of [tex][tex]$\$[/tex] 50$[/tex] every month. Her credit card record for the last 7 months is shown in the table below.
To solve for the finance charges in month 2, we need to follow these steps:
1. Identify the previous balance for month 2: The previous balance is \[tex]$45.00.
2. Identify the APR:
The APR (Annual Percentage Rate) is 15%.
3. Convert APR to a monthly rate:
Since APR is the annual percentage rate, we need to convert it to a monthly rate. The monthly rate is calculated as:
\[\text{Monthly Rate} = \frac{APR}{12} = \frac{15\%}{12} = \frac{0.15}{12}\]
4. Calculate the finance charge:
The monthly finance charge is calculated based on the previous balance and the monthly rate. This is given by:
\[\text{Finance Charge} = \text{Previous Balance} \times \text{Monthly Rate}\]
\[\text{Finance Charge} = \$[/tex]45.00 \times \left(\frac{0.15}{12}\right)\]
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