Question

For the credit card​ account, assume one month between billing dates​ (with the appropriate number of​ days) and interest of 1.6 % per month on the average daily balance. Find ​(a) the average daily​ balance, ​(b) the monthly finance​ charge, and ​(c) the account balance for the next billing. Previous​ Balance: ​$739.41 July 6 Billing Date July 16 Payment ​$200 July 28 Lunch ​$43.86 August 4 Concert tickets ​$69.58 ​(a) The average daily balance is ​$ ---------. ​(Round to the nearest cent as​ needed.) ​(b) The finance charge is ​$ ----------. ​(Round to the nearest cent as​ needed.) ​(c) The account balance for the next billing is ​$ ----------. ​(Round to the nearest cent as​ needed.)

Answer 1

Part 1)

The value of average daily balance is calculated as below:

Date	Unpaid Balance (1)	Number of Days at Each Unpaid Balance (2)	1*2
6-Jul	739.41	10 (from 6th July to 16th July)	7,394.10
16-Jul	539.41(739.41 - 200)	12 (from 16th July to 28th July)	6,472.92
28-Jul	583.27 (539.41 + 43.86)	7 (from 28th July to 4th August)	4,082.89
4-Aug	652.85 (583.27 + 69.58)	2 (from 4th August to 6th August)	1,305.70
		Total Unpaid Balance	$19,255.61
		Average Daily Balance (19,255.61/31)	$621.15

The average daily​ balance is $621.15.

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Part 2)

The value of finance charge is determined as below:

Finance Charge = Average Daily Balance*Interest Rate per Month = 621.15*1.6% = $9.94

The monthly finance​ charge is $9.94.

______

Part 3)

The account balance for the next billing is derived as below:

Account Balance for the Next Billing = Unpaid Balance as on 4-Aug + Finance Charge = 652.85 + 9.94 = $662.79

The account balance for the next billing is ​$662.79.