SOLUTION: A credit card calculates interest using the average daily balance method. The monthly interest rate is 2.0% of the average daily balance. The following transactions occurred betw
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Question 607518: A credit card calculates interest using the average daily balance method. The monthly interest rate is 2.0% of the average daily balance. The following transactions occurred between Nov 1 and Nov 30 billing period.
Previous balance = $1,350.
Nov 1 Billing Date
Nov 8 Payment of $350
Nov 10 Charge of $375
Nov 20 Charge of $120
Nov 25 Charge of $55
Nov 28 Charge of $67
Nov 30 End of Billing Period
a) find the average daily balance for the billing period
b) find the interest to be paid on Dec 1 (the next billing date)
Answer by ankor@dixie-net.com(22740) (Show Source): You can put this solution on YOUR website!
A credit card calculates interest using the average daily balance method.
The monthly interest rate is 2.0% of the average daily balance.
The following transactions occurred between Nov 1 and Nov 30 billing period.
Previous balance = $1,350.
Nov 1 Billing Date
Nov 8 Payment of $350
Nov 10 Charge of $375
Nov 20 Charge of $120
Nov 25 Charge of $55
Nov 28 Charge of $67
Nov 30 End of Billing Period
a) find the average daily balance for the billing period
;
8(1350) = 10800, balance for the first 8 days
1(1000) = 1000, -350
10(1375) = 13750, +375
5(1495) = 7475, +120
3(1550) = 4650, +55
3(1617) = 4851, +67
----------------
30day tot:42526/30 = $1417.53 average daily balance
:
b) find the interest to be paid on Dec 1 (the next billing date)
.02(1417.53) = $28.35
:
I think this is the correct method, but you better check my math.
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