Finance Charges and APR Calculations

The video tutorial explains how to calculate the finance charge and new balance on a Visa card using the unpaid balance method. It starts by introducing the concept of APR and the unpaid balance method. The tutorial then demonstrates how to calculate the finance charge by converting the annual percentage rate to a monthly rate and applying it to the unpaid balance. Finally, it shows how to determine the new balance by adding the finance charge and purchases to the previous balance and subtracting any payments made.

What is the APR of the Visa card mentioned in the scenario?

• 20.0%

• 19.2%

• 18.5%

• 21.5%

What is the unpaid balance on the Visa card at the start?

• $1,382.95

• $1,200.00

• $1,500.00

• $1,600.00

Which method is used to calculate the finance charge in this scenario?

• Average Daily Balance

• Adjusted Balance

• Previous Balance

• Unpaid Balance

What is the total amount of purchases made this month?

• $169.99

• $63.92

• $16.99

• $46.93

What is the significance of the unpaid balance method?

• It uses the balance at the end of the month

• It considers only new purchases

• It includes all transactions

• It calculates interest on the remaining balance

How is the monthly percentage rate calculated from the APR?

• Multiply by 12

• Divide by 12

• Add 12

• Subtract 12

What is the monthly percentage rate derived from the APR of 19.2%?

• 0.016

• 0.014

• 0.018

• 0.012

How do you calculate the finance charge for the month?

• Divide unpaid balance by APR

• Divide unpaid balance by monthly rate

• Multiply unpaid balance by APR

• Multiply unpaid balance by monthly rate

What is the finance charge for this month?

• $20.13

• $22.13

• $21.13

• $23.13

What is the purpose of calculating the finance charge?

• To adjust the APR

• To calculate the total purchases

• To find the monthly interest cost

• To determine the interest for the year