Question

Find the average daily balance for the given​ credit-card account. Assume the billing date is the same day in each​ month, and use the number of days in each month. Then find the finance charge if interest is 1.11.1​% per month on the average daily balance.​ Finally, find the balance at the end of the billing cycle.

Previous balance ​$655.39655.39 Jan. 15Jan. 15 Billing Date Jan. 20Jan. 20 Mail Order ​$nbsp 21.91 21.91 Jan. 23Jan. 23 Returns CR ​$nbsp 19.45 19.45 Jan. 30Jan. 30 Wine ​$nbsp 31.88 31.88 Feb. 5Feb. 5 Payment CR ​$122122 Feb 8Feb 8 Returns CR ​$71.1571.15 Feb 10Feb 10 Birthday Gift ​$125125 Feb 12Feb 12 Cash Advance ​$100100

The average daily balance is

​$nothing.

​(Round to the nearest cent as​ needed.)

Answer 1

finance charge = average daily balance * monthly interest rate

average daily balance = sum of balance on each day / number of days in billing cycle

number of days in billing cycle = 31 (number of days from 16th January to 15th February)

average daily balance = $20,878.01 / 31 = $673.48

finance charge = $673.48 * 1.1%

finance charge = $7.41

Balance at end of cycle = closing balance on 15th February + finance charge

Balance at end of cycle = $721.58 + $7.41

Balance at end of cycle = $728.99