Question

2. The table below shows the activity on the credit card statement of Miss Pepper Mills for the month of April. She started the month with a balance of $342.57.
Date Activity Location Amount
04/05 Payment Payment $200.00
04/15 Charge Gas $26.37
04/22 Charge Macy's $105.42
04/25 Charge Starbuck's $4.24

a. Find the average daily balance.

b. If her card charges an 18.5% annual interest rate on her average daily balance, calculate Miss Pepper Mill’s finance charge for the month of April.

Answer 1

Answer:

Miss Pepper Mills

Credit Card Statement for the month of April:

a. Average Daily Balance:

Average balance = $618.66/5 = $123.73

b. Calculation of Miss Pepper Mill's Finance Charge for the month of April:

Finance charge

= 18.5% of $20.55 x 1/12

= $0.32

Step-by-step explanation:

a) Data and Calculations:

Activity on the credit card statement for April

Beginning balance = $342.57

Date    Activity    Location       Amount     Daily Balance

04/01  Balance                                           $342.57

04/05 Payment  Payment     $200.00       $142.57

04/15  Charge    Gas               $26.37        $116.20

04/22 Charge    Macy's        $105.42          $10.78

04/25 Charge    Starbuck's     $4.24          $6.54

30 days   Total =                                       $618.66

Average balance = Total of the daily balances divided by 30 days

= $618.66/30 = $20.55

Answer 2

The value of the average daily balance and the finance charge for Miss pepper mills are $123.732 and $0.32 respectively.

The average daily balance :

• (Sum of balances) ÷ number of purchases

Sum of balances = (342.57+ (342.57-200) +(342.57 - 200 - 26.37) +(342.57-200-26.37-105.42) + (342.57-200-26.37-105.42-4.24)) = $618.66

Average daily balance :

• (618.66) ÷ 5 = 123.732

Finance charge for April :

• Monthly rate = 18.5% ÷ 12 = 1.541666%

Average balance × daily rate

• Average balance = (618.66) ÷ 30 = 20.622

• 20.622 * 1.5416666% = 0.32

Therefore, the average daily balance and finance charge are $123.732 and $0.32 respectively

Learn more : 149.9448066146972668163077278862934016