Homework Help: Economics-please

Posted by Manny on Thursday, June 15, 2006 at 5:33pm.

Getting back in time, when Nancy wa just about to open her account, and assuming she could choose among credit sources that offered differednt monthly balance determinations, and assunming further that Nancy would increase her outstanding balance over time, whcih credit source woud you recommend? And why?
It would be based on what I got:

AVERAGE DAILY BALANCE METHOD

Beginning balance for November $600

Nov 1-Nov 4 4 days 600 + 0 = 600 600 X 4 = 2400
Nov 5-Nov 9 5 days 600 + 80 = 680 680 X 5 = 3400
Nov 10-Nov 14 5 days 680 – 200 = 480 480 X 5 = 2400
Nov 15-Nov 30 16 days 480 + 50 = 530 530 X 16 = 8480
Total = 16680

16680 divided by 30 days = 556

556 X .16 = 88.96

AVERAGE DAILY BALANCE METHOD EXCLUDING CURRENT PURCHASES

Nov1-Nov9 9 days 600 600 X 9 = 5400
Nov10 – Nov30 21 600 – 200 =400 400 X 21 = 8400

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