Between the previous balance method and the daily balance method, the method of calculating Yvonne's June finance charge that will result in a greater finance charge is:
- c. The previous balance method will have a finance charge <u>$0.45</u> greater than the daily balance method.
<h3>What is the previous balance method?</h3>
Using the previous balance method to compute the finance charge, the beginning balance is added to purchases minus payments. Then the APR is applied to the sum.
<h3>What is the daily balance method?</h3>
The daily balance method ensures that an average daily balance is computed for the billing cycle and then the APR is applied to the average to compute the finance charge.
Date Transaction Amount ($) Balance Daily Balance
6/1 Beginning balance 925.43 $925.43 $5,552.58 ($925.43 x 6)
6/7 Payment 62.74 $862.69 3,450.76 ($862.69 x 4)
6/11 Purchase 28.27 $890.96 8,909.60 ($890.96 x 10)
6/21 Purchase 50.00 $940.96 9,409.60 ($940.96 x 10)
Total $27,322.54
Average daily balance = $910.75 ($27,322.54)
APR = 17.79%
MPR = 1.4825% (17.79%/12)
<h3>Finance Charges:</h3>
Previous balance method = $13.95 ($940.96 x 1.4825%)
Average daily balance = $13.50 ($910.75 x 1.4825%)
Difference = $0.45 ($13.95 - $13.50)
Learn more about the previous and daily balance methods at brainly.com/question/27956979
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<h3>Question Completion:</h3>
The following table details her credit card transactions in the month of June.
Date Transaction Amount ($)
6/1 Beginning balance 925.43
6/7 Payment 62.74
6/11 Purchase 28.27
6/21 Purchase 50.00
Between the previous balance method and the daily balance method, which method of calculating Yvonne's June finance charge will result in a greater finance charge, and how much greater will it be?
a. The daily balance method will have a finance charge $0.21 greater than the previous balance method.
b. The daily balance method will have a finance charge $0.53 greater than the previous balance method.
c. The previous balance method will have a finance charge $0.45 greater than the daily balance method.
d. The previous balance method will have a finance charge $0.40 greater than the daily balance method.
