Question

On October 1st Joe charged $900 to his credit card, on October 10th he charged another $1,300 to his credit card, and on October 15th he charged an additional $100. His credit card charges him an Annual Percentage Rate (APR) of 18% compounded monthly. Using the Average Daily Balance Method calculate Joe's finance charge for the month of October.

Answer 1

Answer:

interest expense for October $ 27.25

Explanation:

       900

+  1,300 x 20/30

+     100 x 15/30    

1,816.67 average balance

Now we multiply this average balance by the interest rate of the credit card:

1,816.67 x 0.18/ 12 = 27.25