Question

Calculate monthly finance charge… assume 10 days for payment recorded

And the month is 30 days.


$3000 balance, 15%, $2500 payment




a) Previous Balance Method 4a)_________

b) Adjusted Balance Method 4b)_________

c) Average Daily Balance Method 4c)_________

any answers ??

Answer 1

The monthly finance charge when the previous balance method is used is $245.83

How to calculate the amount?

The finance charge using the previous balance method will be:

= 3000 × 15 × 1/(12 × 100) + 2500/12

= 3000 × 15 × 1/1200 + 208.33

= $245.83

The charge when the adjusted balance method is used will be:

= $3000 - $2500

= $500

The charge when the average daily balance is used will be:

= 3000 × 15% × (1/12)

= 3000 × 0.15 × (1/12)

= $37.50

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