Question

To the nearest cent, what is the finance charge, if the charge is computed on average daily balance at a periodic monthly rate of 3.2%?

Answer 1

Answer:

Finance charge is $100.34

Step-by-step explanation:

Given : The table attached in the question and the charge is computed on average daily balance at a periodic monthly rate of 3.2%.

To find : What is the finance charge?

Solution :

We have given the number of days and sum of balances.

So, we find the finance charge of each dates one by one.

Finance rate = 3.2%=0.032

Using the formula,

$F=\frac{\text{No. of days}}{\text{total days}}\times \text{sum of balance}\times \text{finance rate}$

Refer the table,

First finance charge is,

Number of days=5, Total number of days = 31 , Finance rate = 0.032 , sum of balance=$1375

$F_1=\frac{5}{31}\times 1375\times 0.032$

$F_1=7.096$

Similarly, we put all the values from the table and we get,

$F_2=\frac{1}{31}\times 385\times 0.032$

$F_2=0.397$

$F_3=\frac{9}{31}\times 3465\times 0.032$

$F_3=32.190$

$F_4=\frac{1}{31}\times 260\times 0.032$

$F_4=0.268$

$F_5=\frac{15}{31}\times 3900\times 0.032$

$F_5=60.387$

Now, the total finance charge is

$F=F_1+F_2+F_3+F_4+F_5$

$F=7.096+0.397+32.190+0.268+60.387$

$F=\ 100.34$

$1=100 cent

$100.34=10034 cent.