Instructor-created question The credit card with the transactions described on t

Question

Instructor-created question The credit card with the transactions described on the right uses the average daily balance method to calculate interest. The annual interest rate is 30% of the average daily balance. Calculate parts a-c using the statement on the right. Transaction Description Previous balance, $6290.00 Transaction Amount March 5 Payme March 7 Charge: Restaurant 30.00 March 12 Charge: Groceries $80.00 March 21 Charge: Car Repairs 220.00 $250.00 credit avment Due Date: April 9 a. Find the average daily balance for the biling period. Round to the nearest cent. The average daily balance for the billing period is S (Round to the nearest cent as needed.) b. Find the interest to be paid on April 1, the next billing date. Round to the nearest cent. The interest to be paid on April 1 is S (Use the answer from part a to find this answer. Round to the nearest cent as needed.) c. Find the balance due on April 1 The balance due on April 1 is S (Use the answer from part b to find this answer.) undntdls S

Explanation / Answer

BALANCE FROM MARCH 1 TO 4 , $ 6290 I.E 4 x $6290 = $ 25160

MARCH 5 TO 6 ($ 6290 - $250 Cr) = $ 6040 x 2 = $ 12080

MARCH 7 TO 11 ($ 6040 + $30 Dr) = $6070 x 5 = $ 30350

MARCH 12 TO 20 ( $ 6070 + $80 Dr) = $6150 x 9 = $ 55350

MARCH 21 TO 31 ( $ 6150 + $ 220 Dr ) = $ 6370 x 11 = $ 70070

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TOTAL = $ 193010 IN 31 DAYS

(a) HENCE AVERAGE DAILY BALANCE $ 193010 / 31 = $ 6226.13

(b) INTEREST ( P R T) / 100 = ( $ 6226.13 x 30 x 31/365) / 100 = $ 158.64  (interest for march 31 days)

(c) BALANCE DUE ON APRIL 1 = $ 6370 + $ 158.64 = $ 6528.64

  

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