Asked by vianna trigueros on Apr 24, 2024
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Thompson Lubricating store has the following credit terms: "The finance charge, if any, is based on the previous balance before payments or credits are deducted. The rates are 1.5% per month up to $1,300 and 1.3% per month on amounts in excess of $1,300. These are annual percentage rates of 15.7% and 13.02%, respectively. There is no finance charge if the full amount of the new balance is paid within 30 days after the cycle closing date."Compute the finance charge and the new balance for the two customers shown below. Assume that both payments were made within the 30-day period.
Finance Charge
The total cost of borrowing, including interest and other fees.
Previous Balance
The amount of money that was owed at the end of the previous billing period before any new charges were added.
Cycle Closing
The process of completing a cycle or period, especially in financial contexts, marking the end of an accounting or billing period.
- Acquire knowledge of and apply the stipulations regarding credit, inclusive of finance fees and timelines for repayments.
- Ascertain the net balances, finance costs, and renewed balances across diverse credit agreements.
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Learning Objectives
- Acquire knowledge of and apply the stipulations regarding credit, inclusive of finance fees and timelines for repayments.
- Ascertain the net balances, finance costs, and renewed balances across diverse credit agreements.