Question

The balance after the grace period is $25,000. A payment of $5,000 is made on the 10th day. A payment of $5,000 is made on the 20th day. What is the average daily balance?

Answer 1

The average daily balance after 20 days is; $1750

Average Balance

The initial balance after grace period is; $25,000

Afterwards, A payment of $5,000 each is made on the 10th and 20th day.

Hence, the total balance after 20 days is;

• = $25,000 + $5000 + $5000

• = $35,000.

The average daily balance is therefore the quotient of $35,000 and 20 days

• The average daily balance = $35,000/20

• Average daily balance = $1750

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