calculate the monthly finance charge for the 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 answers to the nearest cent). $ 400 balance, 15%, $ 50 payment. A) previous balance method. B) adjusted method. C) average method

To calculate the monthly finance charge using different methods, we need to understand how each method works.

A) Previous Balance Method:
The previous balance method calculates the finance charge based on the balance at the end of the previous month.

To calculate the finance charge using the previous balance method:
1. Determine the average daily balance.
- Start with the beginning balance for the month: $400.
- Subtract any payments made during the billing cycle: $400 - $50 = $350.
- Multiply the result by the number of days in the billing cycle (30): $350 * 30 = $10,500.
- Divide the total by the number of days in the billing cycle: $10,500 / 30 = $350 (average daily balance).

2. Calculate the finance charge using the interest rate.
- Convert the annual percentage rate (APR) to a decimal: 15% = 0.15.
- Divide the decimal rate by the number of billing periods in a year: 0.15 / 12 (months) = 0.0125.
- Multiply the result by the average daily balance: $350 * 0.0125 = $4.375 (monthly finance charge).

Rounded to the nearest cent, the monthly finance charge using the previous balance method would be $4.38.

B) Adjusted Balance Method:
The adjusted balance method takes into account the payment made during the billing cycle.

To calculate the finance charge using the adjusted balance method:
1. Subtract any payments made during the billing cycle from the beginning balance: $400 - $50 = $350.

2. Calculate the finance charge using the interest rate.
- Multiply the result by the interest rate: $350 * 0.15 = $52.50 (monthly finance charge).

Rounded to the nearest cent, the monthly finance charge using the adjusted balance method would be $52.50.

C) Average Daily Balance Method:
The average daily balance method calculates the average of each daily balance during the billing cycle.

To calculate the finance charge using the average daily balance method:
1. Determine the average daily balance (as explained in the previous method): $350 (average daily balance).

2. Calculate the finance charge using the interest rate (the same calculation as the previous balance method):
- Multiply the average daily balance by the interest rate: $350 * 0.0125 = $4.375 (monthly finance charge).

Rounded to the nearest cent, the monthly finance charge using the average daily balance method would be $4.38.

In summary:
A) Previous Balance Method: $4.38
B) Adjusted Balance Method: $52.50
C) Average Daily Balance Method: $4.38