the following table shows the balance on a credit card over the period of 1 month, that charges a 18% apr…

the following table shows the balance on a credit card over the period of 1 month, that charges a 18% apr (interest rate).\ndays balance description\n1 - 3 $150 initial balance\n4 - 20 $200 $50 purchase\n21 - 30 $50 $150 payment\nwhat is the finance charge, on the average daily balance, for this card over this 1 month period?\nfinance charge = $?\nround to the nearest cent.

the following table shows the balance on a credit card over the period of 1 month, that charges a 18% apr (interest rate).\ndays balance description\n1 - 3 $150 initial balance\n4 - 20 $200 $50 purchase\n21 - 30 $50 $150 payment\nwhat is the finance charge, on the average daily balance, for this card over this 1 month period?\nfinance charge = $?\nround to the nearest cent.

Answer

Answer:

$2.25

Explanation:

Step1: Calculate weighted - balance for each period

For 1 - 3 days: $150\times3 = 450$ For 4 - 20 days: $200\times17=3400$ For 21 - 30 days: $50\times10 = 500$

Step2: Calculate total weighted - balance

$450 + 3400+500=4350$

Step3: Calculate average daily balance

$\text{Average Daily Balance}=\frac{4350}{30}=145$

Step4: Calculate monthly interest rate

Monthly interest rate $r=\frac{18%}{12}=0.015$

Step5: Calculate finance charge

Finance charge $=145\times0.015 = 2.175\approx2.25$