# Credit and Taxes

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.

Assuming a 30-day period in November, calculate November's interest. Also, calculate the interest Nancy would have paid with: a) the previous balance method, b) the adjusted balance method.
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.

I will be glad to critique your thinking on this. Begin by reviewing the meaning of the daily balance, adjusted balance and previous balance methods of interest computation.

If her credit balance will usually increase on a month to month basis over time, then her previous balance will usually be less than her average or adjusted balance. That should give you a clue to the answer to the last question.

1. 👍 0
2. 👎 0
3. 👁 50
1. 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. 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. 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. For information on Macintosh Word shortcuts, click here.

1. 👍 0
2. 👎 0
posted by Benita

## Similar Questions

1. ### Personal Finance

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

asked by Nicole on August 30, 2007
2. ### math

Nancy Tai has recently opened a revolving charge account with MasterCard. Her credit limit is \$1,000, but she has not charged that much since opening the account. Nancy hasnâ€™t had the time to review her monthly statements

asked by fila on March 30, 2016
3. ### math

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

asked by sherry on October 24, 2006
4. ### Finance

Nancy Tai recently opened a revolving charge account with Mastercard. Her limit is \$1000, but she has not charge that much since opening the account. Nancy hasn't had the time to review her monthly statements as promptly as she

5. ### Finance

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

asked by JERYL on August 31, 2007
6. ### Personal Finance

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

asked by Sue on October 11, 2008
7. ### Businees(finance)

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

asked by Dena on April 7, 2008
8. ### Finance

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

asked by Jes on July 20, 2006
9. ### Credit and Taxes

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 statement as

asked by candy on July 20, 2006
10. ### Finance

need 1-2 pages 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

asked by Jessi on June 18, 2007

More Similar Questions