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, follow these steps:

Step 1: Determine the adjusted balance.
The adjusted balance is the balance at the end of the billing period minus any payments made during the billing period. In this case, the balance is $500, and the payment is $400. Therefore, the adjusted balance is $500 - $400 = $100.

Step 2: Calculate the daily periodic rate.
The daily periodic rate is calculated by dividing the annual interest rate by 365. In this case, the annual interest rate is 20%, so the daily periodic rate is 20% / 365 = 0.0548%.

Step 3: Determine the number of days in the billing period.
The billing period in this case is 30 days.

Step 4: Calculate the monthly finance charge.
To calculate the monthly finance charge, multiply the adjusted balance by the daily periodic rate and then multiply the result by the number of days in the billing period. Finally, round the answer to the nearest cent.

Monthly finance charge = Adjusted balance x Daily periodic rate x Number of days
= $100 x 0.0548% x 30
≈ $0.16 (rounded to the nearest cent)

Therefore, the monthly finance charge for this credit card transaction is approximately $0.16.