##### Missing info for the question I posted

 Algebra Tutor: None Selected Time limit: 1 Day

\$400 balance, 15%, \$50 payment

Nov 20th, 2014

(a)
The previous balance method of calculating your finance charge uses the balance at the beginning of your billing cycle. Charges applied and payments credited to your account during the billing cycle won’t affect your finance charge.

APR = 15%

Periodic rate = 15/12 =1.25%

Days in billing cycle = 30

Beginning balance = \$400

Finance charge = Previous balance * periodic rate

= 400 * 0.0125
= \$5

(b)
The adjusted balance method of calculating your finance charge uses your previous balance less any payments and credits made during the billing cycle. New charges are not factored into the adjusted balance. The periodic rate is applied to the adjusted balance to calculate the finance charge.

APR = 15%

Periodic rate = 1.25%

Days in billing cycle = 30

Previous balance = \$400

Payment 10th day = \$50

Ending balance = \$350

Finance charge = Adjusted balance * periodic rate

= 350 * 0.0125
= \$4.375

(c)
The daily balance method of calculating your finance charge uses the actual balance on each day of your billing cycle. The rate applied is 1/365th of your APR. This is your daily rate. Finance charges are calculated by summing each day’s balance multiplied by the daily rate.

APR = 15%

daily rate = 15/365 =0.0411%

days in billing cycle = 30

daily balance = \$400

Payment 10th day = \$50

Ending balance = \$350

finance charge = (Day 1 balance * daily rate) + ... + (Day 30 balance * daily rate)

= (400*0.000411*10) + (350*0.000411*20)
= \$4.52

Nov 20th, 2014

...
Nov 20th, 2014
...
Nov 20th, 2014
Dec 6th, 2016
check_circle