Question

What is a monthly finance charge if the average daily balance is $30, the daily periodic rate is 0.07% and the number of days in a cycle is 30?
A. 21 cents
B. 63 cents
C. 90 cents

Answer 1

Answer:

The finance charge is:

Option: B

B. 63 cents.

Step-by-step explanation:

We are given:

Average daily balance = $30

The daily periodic rate = 0.07%

and Number of days in a cycle is 30.

We know that the formula for the finance charge is given as:

$Finance\ charge=\dfrac{APR\cdot Balance\cdot Number\ of\ days\ in\ billing\ cycle}{365}$

As we are given daily periodic rate this means that:

$\dfrac{APR}{365}=0.07\%=0.0007$

Hence, putting the value in the formula we have:

$Finance\ charge=0.0007\times 30\times 30\\\\Finance\ charge=0.63$

finance charge=$ 0.63

As we know that:

1 dollar=100 cents.

Hence, 0.63 dollars=63 cents

Hence, the finance charge is:

63 cents

Answer 2

B. 63 Cents is the correct answer.