m Homework Section 83 Homework hans Score 0 of 1 pt 80f 9 5

m Homework: Section 8.3 Homework hans Score: 0 of 1 pt 80f 9 (5 complete) ? HW Score: 40 8.3.35 Use the average daily balance method to compute the finance charge on the credit Month April (30 days), previous month\'s balance $220 card account for the previous month. The starting balance and transactions on the account for the month of April are given to the right Assume an annual interest April 14 Charged 565 for a coat rate of 18% April 16 April 21 April 25 Made payment of $70 Charged $126 for DVDs Charged $34 for groceries pts Round to the nearest cent as needed ) estion n the box and then click Check Arswer

Solution

Answer:

Period

No of Days balance Outstanding

Amount Outstanding

April 1 to April 13

13

220

April 14 to April 15

2

220 + 65 = 285

April 16 to April 20

5

285 – 70 = 215

April 21 to April 24

4

215 + 176 = 391

April 25 to April 30

6

391 + 34 = 425

a) Calculation of Average Daily Balance Outstanding

= (220 * 13) + (285 * 2) + (215 * 5) + (391 * 4) + (425 * 6) / 30

= 8619 / 30

= $ 287.30

b) Calculation of Finance Charge

Annual Interest Rate = 18% or 1.5% per month

= 287.30 * 1.5%

= $ 4.3095 or $ 4.31

OR

= 287.30 * 18% * 30/365

= $ 4.25

Period	No of Days balance Outstanding	Amount Outstanding
April 1 to April 13	13	220
April 14 to April 15	2	220 + 65 = 285
April 16 to April 20	5	285 – 70 = 215
April 21 to April 24	4	215 + 176 = 391
April 25 to April 30	6	391 + 34 = 425