Saul has an account with a department store. His daily balance
for the first 11 days of April was $225. His daily balance for
the next 6 days was $262.22. For the last 14 days it was $297.33.
What was his finance charge if the store used a rate of 2%?
I do not know of any store that computes finance charges on an average daily balance basis. It is usually based upon the unpaid balance at the end of the month. You don't say whether the 2% is a daily or monthly rate.
They probably want you to take 2% of the average balance for the month. That average balance is
(11/30*225) + (6/30*262.22) + (14/30*297.33) = 272.60
2% of that is $5.45
what is -90 + 5
Post your questions separately, not on someone else's question thread.
Do this by clicking on "Post a New Question"
Add five to -90. You will get a less negative number.
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.)
$3,000 balance, 21% rate, $150 payment, average daily balance method
To calculate the finance charge, we need to find the average daily balance for the billing cycle and then apply the interest rate.
First, let's calculate the total balance for each period:
- For the first 11 days of April: $225 x 11 = $2475
- For the next 6 days: $262.22 x 6 = $1573.32
- For the last 14 days: $297.33 x 14 = $4162.62
Next, let's calculate the total number of days in the billing cycle: 11 + 6 + 14 = 31 days
Now we can calculate the average daily balance: (2475 + 1573.32 + 4162.62) / 31 = $267.18354839 (rounded to 2 decimal places)
Finally, we can calculate the finance charge using the formula: Finance Charge = Average Daily Balance x Daily Rate x Number of Days
The daily rate is 2% divided by 365 (since there are 365 days in a year).
Finance Charge = $267.18354839 x (0.02 / 365) x 31
Finance Charge = $3.66 (rounded to 2 decimal places)
Therefore, Saul's finance charge is $3.66.