Question
In: Finance
Use the average daily balance method to compute the finance charge on the credit card account...
Use the average daily balance method to compute the finance charge on the credit card account for the previous month. The starting balance and transactions on the account for the month of April are given to the right. Assume an annual interest rate of? 18%.
?Month: April? (30 days); previous? month's balance: ?$380
April 5
Charged ?$51 for a coat
April 8
Made payment of ?$90
April 14
Charged ?$149 for DVDs
April 29
Charged ?$29 for groceries
The finance charge is
?(Round to the nearest cent as? needed.)
Solutions
Expert Solution
| Date | Purchases | Payment | Balance | |
| 01-Apr | $ 380.00 | |||
| 05-Apr | $ 51.00 | $ 431.00 | ||
| 08-Apr | $ 90.00 | $ 341.00 | ||
| 14-Apr | $ 149.00 | $ 490.00 | ||
| 29-Apr | $ 29.00 | $ 519.00 | ||
| Date | Balance | Number of Days* Balance | ||
| 1 to 4 Days | $ 380.00 | 4*380= | $ 1,520.00 | |
| 5 to 7 days | $ 431.00 | 3*431= | $ 1,293.00 | |
| 8 to 13 Days | $ 341.00 | 6*341= | $ 2,046.00 | |
| 14 to 28 days | $ 490.00 | 15*490= | $ 7,350.00 | |
| 29 to 30 Days | $ 519.00 | 2*519 | $ 1,038.00 | |
| $ 13,247.00 | ||||
| Average Daily Balance=($13247/30) | $ 441.57 | |||
| I=441.57*18%*(30/365) | ||||
| Finance Charge= | $ 6.53 |
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