Posted by Sue on Saturday, October 11, 2008 at 4:23am.
Nancy Tai has recently opened a revolving charge account with MasterCard. Her credit limit is $1000, but she has not charged that much since opening the account. Nancy hasn't had the time to review her monthly statements as promptly as she should, but over the upcoming weekend, she plans to catch up on her work.
In reviewing November's statement, she notices that her beginning balance was $600 and that she made a $200 payment on November 10. She also charged purchases of $80 on November 5, $100 on November 15, and $50 on November 30. She can't tell how much interest she paid in November because she spilled watercolor paint on that portion of the statement. She does remember, though, seeing the letters APR and the number 16%. Also, the back of her statement indicates that interest was charged using the average daily balance method including current purchases, which considers the day of a charge or credit.
1. Assuming a 30-day period in November, calculate November's interest using the average daily balance method. Also, calculate the interest Nancy would have paid with: a) the previous balance method, b) the adjusted balance method.
2. Going back in time, when Nancy was just about to open her account, and assuming she could choose among credit sources that offered different monthly balance determinations, and assuming further that Nancy would increase her outstanding balance over time, which credit source would you recommend? Explain.
SHOW ALL WORK FOR EACH ASSIGNMENT AND EXPLAIN EACH STEP CAREFULLY.
- Personal Finance - Writeacher, Saturday, October 11, 2008 at 9:24am
Please note that we don't do students' homework for them. Be sure to go back into your textbook or use a good search engine. http://hanlib.sou.edu/searchtools/
Once YOU have come up with attempted answers to YOUR questions, please re-post and let us know what you think. Then someone here will be happy to comment on your thinking.
=)
Answer this Question
Related Questions
Personal Finance - Nancy Tai has recently opened a revolving charge account with...
Finance - Nancy Tai has recently opened a revolving charge account with ...
math - Nancy Tai has recently opened a revolving charge account with MasterCard...
Businees(finance) - Nancy Tai has recently opened a revolving charge account ...
Finance - Nancy Tai recently opened a revolving charge account with Mastercard. ...
Finance - Nancy Tai has recently opened a revolving charge account with ...
Credit and Taxes - Please Help me! Nancy Tai has recently opened a revolving ...
Finance - need 1-2 pages Nancy Tai has recently opened a revolving charge ...
Credit and Taxes - Nancy Tai has recently opened a revolving charge account with...
Finance - Nick has a revolving department store credit card account 15%. Last ...
For Further Reading
