A credit card billing cycle is 15 days. You started your billing cycle with a balance of $500. On Day 7, you made a $400 purchase. On Day 12, you made a $700 payment to your account. If no other transactions are made until the end of your billing cycle, what is your average daily balance on day 15?
A- $453.53
B- $353.35
C- $553.33
D- $535.55
To find the average daily balance on day 15, we need to calculate the balance for each day in the billing cycle, then divide by the number of days in the cycle.
Day 1-6: Balance = $500
Day 7-11: Balance = $500 + $400 = $900
Day 12-15: Balance = $900 - $700 = $200
To find the average daily balance, we add up the balances for each day and divide by 15:
(6 days x $500) + (5 days x $900) + (4 days x $200) = $3,600
$3,600 / 15 days = $240 average daily balance
Therefore, the correct answer is not listed.
but which one do I choose
Since the correct answer is not listed, you could choose the answer that is closest to the calculated average daily balance of $240.
The closest option is B- $353.35, which is lower than the actual average daily balance.
To calculate the average daily balance on day 15, we need to consider the transactions made and the number of days between each transaction.
Step 1: Start with the initial balance on day 1.
On day 1, your balance is $500.
Step 2: Calculate the balance after the first transaction on day 7.
You made a purchase of $400 on day 7. So, your balance on day 7 becomes $500 - $400 = $100.
Step 3: Calculate the balance after the second transaction on day 12.
You made a payment of $700 on day 12. So, your balance on day 12 becomes $100 - $700 = -$600.
Step 4: Calculate the average daily balance.
To find the average daily balance, we need to consider the number of days between each transaction.
From day 1 to day 7, there are 7 days.
From day 7 to day 12, there are 5 days.
From day 12 to day 15, there are 3 days.
Now, we need to multiply the balance for each period by the number of days and add them all together.
For the period from day 1 to day 7:
The balance is $500, and the number of days is 7, so the product is $500 * 7 = $3500.
For the period from day 7 to day 12:
The balance is $100, and the number of days is 5, so the product is $100 * 5 = $500.
For the period from day 12 to day 15:
The balance is -$600, and the number of days is 3, so the product is -$600 * 3 = -$1800.
Now, add up the products from the three periods:
$3500 + $500 + (-$1800) = $1200.
Finally, divide the total by the number of days in the billing cycle (15):
$1200 / 15 = $80.
Therefore, the average daily balance on day 15 is $80.
None of the given options match the calculated value. Please check your calculations or verify the answer choices.