hopefully this works Using the average daily balance method

hopefully this works

Using the average daily balance method and the information given, find the credit card finance charge for the month of August (31 days). The annual interest rate is 18%. The finance charge is $ (Round to the nearest cent.)

Solution

The average daily balance method is a way of calculating interest by considering the balance owed or invested at the end of each day of the period rather than the balance owed or invested at the end of the week, month or year.

Here is how interest rate is calculated:

Aug 01 - Aug 13 (DB of $180.00 x 13 days) = $2340.00

Aug 14 - Aug 17(DB of $212.00 x 04days) = $848.00

Aug 18 - Aug 20(DB of $122.00 x 03days) = $366.00

Aug 21 - Aug 23(DB of $264.00 x 03days) = $792.00

Aug 24 - Aug 31(DB of $277.00 x 08days) = $2216.00

TOTAL=  $6562.00

  $6562/31 days in the billing period = $211.68 average daily balance.

$211.68 x 1.5% monthly interest rate = $3.18

Thus the credit card finance charge for the month of august is $3.18