m Homework: Section 8.3 Homework hans Score: 0 of 1 pt 80f 9 (5 complete) ? HW S

ID: 2825370 • Letter: M

Question

m Homework: Section 8.3 Homework hans Score: 0 of 1 pt 80f 9 (5 complete) ? HW Score: 40 8.3.35 Use the average daily balance method to compute the finance charge on the credit Month April (30 days), previous month's balance $220 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 April 14 Charged 565 for a coat rate of 18% April 16 April 21 April 25 Made payment of $70 Charged $126 for DVDs Charged $34 for groceries pts Round to the nearest cent as needed ) estion n the box and then click Check Arswer

Explanation / Answer

Answer:

Period

No of Days balance Outstanding

Amount Outstanding

April 1 to April 13

220

April 14 to April 15

220 + 65 = 285

April 16 to April 20

285 – 70 = 215

April 21 to April 24

215 + 176 = 391

April 25 to April 30

391 + 34 = 425

a) Calculation of Average Daily Balance Outstanding

= (220 * 13) + (285 * 2) + (215 * 5) + (391 * 4) + (425 * 6) / 30

= 8619 / 30

= $ 287.30

b) Calculation of Finance Charge

Annual Interest Rate = 18% or 1.5% per month

= 287.30 * 1.5%

= $ 4.3095 or $ 4.31

= 287.30 * 18% * 30/365

= $ 4.25