Question

the credit card with the transactions described on the right uses the average daily balance method to calculate interest. the monthly interest rate is 1.5% of the average daily balance. calculate parts a - d using the statement on the right.
transaction description | transaction amount
previous balance, $6250.00 |
march 1 billing date |
march 5 payment | $400.00 credit
march 7 charge: restaurant | $30.00
march 12 charge: groceries | $70.00
march 21 charge: car repairs | $230.00
march 31 end of billing period |
payment due date: april 9 |

a. find the average daily balance for the billing period. round to the nearest cent.
the average daily balance for the billing period is $ 6052.58.
(round to the nearest cent as needed.)

b. find the interest to be paid on april 1, the next billing date. round to the nearest cent.
the interest to be paid on april 1 is $\square.
(use the answer from part a to find this answer. round to the nearest cent as needed.)

Explanation:

Step1: Identify the formula for interest

The interest is calculated as the monthly interest rate (1.5% or 0.015 in decimal) multiplied by the average daily balance from part a. So the formula is \( \text{Interest} = \text{Average Daily Balance} \times \text{Monthly Interest Rate} \).

Step2: Substitute the values

We know the average daily balance is $6052.58 and the monthly interest rate is 0.015. So we calculate \( 6052.58 \times 0.015 \).

Step3: Perform the multiplication

\( 6052.58 \times 0.015 = 90.7887 \), which rounds to $90.79 when rounded to the nearest cent.

Answer:

\( \$90.79 \)