William Douglas recently received his monthly MasterCard bill for the period Jun

Question

William Douglas recently received his monthly MasterCard bill for the period June 1-30, 2010, and wants to verify the monthly finance charge calculation, which is assessed at a rate of 18% per year and based on average daily balances including new purchases. His outstanding balance, purchases, and payments are as follows: Previous balance: $376 Purchases: Payments: June 4 $140 June 21 $20 June 12 $52 June 20 $135 June 26 $86 a.What is his average daily balance for the period? (Use a table like the one in Exhibit 6.8 for your calculations.) Round the answer to 2 decimal places. What is his the finance charge for the period? (Use a table like the one in Exhibit 6.8 for your b.calculations.) Round the answer to 2 decimal places.

Explanation / Answer

compounded = 1650 * (1.05 ^ 20) 1.05 to the 20th = 4377.94 simple = 1650 + 1650*.05*20 = 3300 4377.94 - 3300 = 1077.94

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