Question

calculate the average daily balance, finance charge, and new balance using the average daily balance method. round all dollar amounts to the nearest cent. if applicable, include a thousands comma.

monthly rate: 1.15%

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$$\begin{array}{|l|l|l|l|c|l|} \\hline \\text{date} & \\text{payments} & \\text{purchases} & \\text{balance} & \\text{number of days} & \\text{product} \\\\ \\hline 9/1 - 9/4 & & & \\$168.21 & 4 & 672.84 \\\\ \\hline 9/5 & \\$95.00 & & \\$73.21 & 1 & 73.21 \\\\ \\hline 9/6 - 9/18 & & & a & b & c \\\\ \\hline 9/19 & & \\$133.67 & \\$206.88 & 1 & 206.88 \\\\ \\hline 9/20 - 9/30 & & & d & e & f \\\\ \\hline \\text{total} & & & & 30 & g \\\\ \\hline \\end{array}$$

\\)

\\(a = \\$\\)
\\(b =\\)
\\(c =\\)
\\(d = \\$\\)
\\(e =\\)
\\(f =\\)
\\(g = \\$\\)

average daily balance = \\(\\$ \quad \div 30 = \\$\\)
finance charge = monthly rate \\(\times\\) average daily balance = \\(\\$\\)
new balance = previous balance \\(-\\) payment/credits \\(+\\) finance charge \\(+\\) new purchases = \\(\\$\\)

Explanation:

Calculate values for the third row (9/6 - 9/18)

Using the Credit Card Balance knowledge point, the balance \(A\) remains unchanged from the previous day since there are no transactions:

$$ A = \$73.21 $$

The number of days \(B\) from 9/6 to 9/18 inclusive is:

$$ B = 18 - 6 + 1 = 13 $$

The product \(C\) is the balance multiplied by the number of days:

$$ C = 73.21 \times 13 = 951.73 $$

Calculate values for the fifth row (9/20 - 9/30)

Using the Credit Card Balance knowledge point, the balance \(D\) remains unchanged from the previous day (9/19):

$$ D = \$206.88 $$

The number of days \(E\) from 9/20 to 9/30 inclusive is:

$$ E = 30 - 20 + 1 = 11 $$

The product \(F\) is:

$$ F = 206.88 \times 11 = 2,275.68 $$

Calculate the total sum of products G

Using the Average Daily Balance knowledge point, the sum of all products \(G\) is:

$$ G = 672.84 + 73.21 + 951.73 + 206.88 + 2,275.68 = 4,180.34 $$

Calculate the average daily balance

Using the Average Daily Balance knowledge point, divide the sum of products by the total number of days (30):

$$ \text{Average daily balance} = \frac{4,180.34}{30} \approx 139.3447 \approx \$139.34 $$

Calculate the finance charge and new balance

Using the Finance Charge knowledge point, multiply the monthly rate by the average daily balance:

$$ \text{Finance charge} = 1.15\% \times 139.34 = 0.0115 \times 139.34 \approx 1.6024 \approx \$1.60 $$

Using the Credit Card Balance knowledge point, calculate the new balance:

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Answer:

• \(A = 73.21\)
• \(B = 13\)
• \(C = 951.73\)
• \(D = 206.88\)
• \(E = 11\)
• \(F = 2,275.68\)
• \(G = 4,180.34\)

• Average daily balance = \(\$4,180.34 \div 30 = \$139.34\)
• Finance charge = \(1.15\% \times \$139.34 = \$1.60\)
• New balance = \(\$168.21 - \$95.00 + \$1.60 + \$133.67 = \$208.48\)