5. A. Calculate the average daily balance for the following Mastercard account.

Question

5. A. Calculate the average daily balance for the following Mastercard account.
31-day billing cycle
December has 31 days
12/20 Billing date $800.00
12/27 Payment to Mastercard 100.00
12/30 Charge: Old Navy 300.00
1/9 Payment to Mastercard 50.00
1/12 Cash advance 200.00


B. If the monthly periodic interest rate is 2.0%, how much interest is due?
5. A. Calculate the average daily balance for the following Mastercard account.
31-day billing cycle
December has 31 days
12/20 Billing date $800.00
12/27 Payment to Mastercard 100.00
12/30 Charge: Old Navy 300.00
1/9 Payment to Mastercard 50.00
1/12 Cash advance 200.00


B. If the monthly periodic interest rate is 2.0%, how much interest is due?
5. A. Calculate the average daily balance for the following Mastercard account.
31-day billing cycle
December has 31 days
12/20 Billing date $800.00
12/27 Payment to Mastercard 100.00
12/30 Charge: Old Navy 300.00
1/9 Payment to Mastercard 50.00
1/12 Cash advance 200.00


B. If the monthly periodic interest rate is 2.0%, how much interest is due?

Explanation / Answer

Here is the calculation for the average daily balance method: average daily balance * APR * days in billing cycle / 365.

so,

the average daily balance for the following Mastercard account for31-day billing cycle is:

800+100+300+50+200/31

=1450/31

=46.77

Periodic Interest Rate (P)

=> This is the rate per compounding period, such as per month when your period is year and compounding is 12 times per year.

  P = R/m where R is the annual rate.

P=2.0/31=0.06452%

0.06452% need to pay.

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