Calculate the monthly finance charge for the following credit card transaction. Assume that it takes 10 days for a payment to be received and recorded and that the month is 30 days long. (Round your answer to the nearest cent.)

$500 balance, 20% rate, $400 payment, adjusted balance method

To calculate the monthly finance charge using the adjusted balance method, we first need to determine the average daily balance during the billing period. The formula to calculate the average daily balance is:

Average Daily Balance = (Balance * Number of Days) - (Payment * Number of Days)

Given:
Balance = $500
Rate = 20%
Payment = $400
Number of Days = 30

Using the formula, we have:
Average Daily Balance = ($500 * 30) - ($400 * 30)
Average Daily Balance = $15,000 - $12,000
Average Daily Balance = $3,000

Next, we calculate the monthly finance charge using the formula:

Finance Charge = Average Daily Balance * Monthly Interest Rate

Monthly Interest Rate = (Annual Interest Rate / Number of Billing Cycles) / 100

Since the number of billing cycles in a month is typically 1, we can simplify the formula to:

Monthly Interest Rate = Annual Interest Rate / 12

Given:
Annual Interest Rate = 20%

Using the formula, we have:
Monthly Interest Rate = 20% / 12
Monthly Interest Rate = 1.67%

Finally, we calculate the monthly finance charge:
Finance Charge = Average Daily Balance * Monthly Interest Rate
Finance Charge = $3,000 * 1.67%
Finance Charge = $50.10

Therefore, the monthly finance charge for the given credit card transaction is $50.10.