Combine the information in the problem and the chart using the average balance method to solve the problem.
The account balance on April 1st is $50.51. On April 15th, a payment of $15.00 is made. What is the average daily balance for the account? What is the finance charge if the annual rate is 18%? What is the new account balance?
Finance charge = $0.76 To get this you need to take the account balance on April 1st and multiply by the annual rate of 18%, which looks like this:
$50.51 × 0.18 = 9.0918 Then you divide your answer by 12 for the months of the year to get:
9.0918 ÷ 12 = 0.75765 Which rounds to $0.76 for you finance charge
New balance = $55.54 To get this you take the account balance on April 1st and subtract the payment of $15.00 and then add the purchase of $19.27 and the finance charge of $0.76, like so:
