Question

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QUESTION 4
Use the summary section of the monthly credit card statement below to calculate the finance charge.
Previous Payments
Late
Finance New
SUMMARY
Balance Credits Transactions Charge Charge Balance
$750.00 $70.00 $110.00 $0.00
Average
# Days
Daily
in Billing APR
Balance Cycle
$805.00
30
15%
Minimum
Payment
$40.00
Monthly
Periodic
Rate
1.25%
a $10.06
b. $9.38
c. $33.54
d. $12.98

Answer 1

Answer:

The answer is 33.54

Step-by-step explanation:

Billing cycles/ARP

30/1.25

Rate x monthly balance

0.041666666666667 X 805= 33.54

Answer 2

The required finance charge is $10.06. Option A is correct.

A table is given, and the finance charge is to be determined.
Average daily balance = $805 ;  Monthly periodic rate = 1.25%

What is the finance charge?

A finance charge is defined as the expenditure of lending money, including interest and other fees. It is a percentage of the amount lent or a service fee charged by the institution. Credit lending institutions have a range of ways of charging finance charges.

Finance charge = Average daily balance * Monthly periodic rate
                           =  $805 * 1.25/100

                           = $10.06

Thus, the required finance charge is $10.06.

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