Question

Solve for the monthly finance charge if the average daily balance is $20, the daily periodic rate is 0.05%, and the number of days in the cycle is 30.
A.) 30¢
B.) 31¢
C.) 50¢

Answer 1

Given:
average daily balance = $20
daily period rate = 0.05%
number of days in a cycle = 30 days

monthly finance charge.

20 * 0.05% = 0.01
0.01 * 30days = 0.30  

0.30 or 30cents. Choice A) 30¢

Answer 2

Answer:

Monthly finance charge would be 30 cents.

Step-by-step explanation:

To solve the problem, we must find out daily finance charge and then multiply with 30 to get monthly finance charge as monthly cycle number is 30.

It is given :

Average daily balance = $20.00

Daily periodic rate     = 0.05%

to get daily finance charge 0.05% of 20 = 0.0005 × 20 = $0.01

Number of days in the cycle = 30 days

Monthly finance charge = $0.01 × 30 = $0.30 or 30 cents

Answer is A. 30 cents.