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:

$27.25

Explanation:

We must first determine the average balance:

(900 x 30 days) / 30 days = $900

($1,300 x 20 days) / 30 days = $866.67

($100 x 15 days) / 30 days = $50

average balance = $900 + $866.67 + $50 = $1,816.67

now we multiply times APR:

daily balance x APR/12 = $1,816.67 x (0.18/12) = $27.25