Question

1. leah has a credit card with target and they calculate her finance charges using the average daily balance method. her finance charges this past month were $25.95 and her average daily balance was $998.08. find the periodic rate target uses for her finance charges and express the answer as a percentage.

Explanation:

Step1: Recall finance charge formula

Finance Charge = Average Daily Balance × Periodic Rate

Step2: Rearrange to solve for rate

Periodic Rate = $\frac{\text{Finance Charge}}{\text{Average Daily Balance}}$

Step3: Substitute given values

Periodic Rate = $\frac{25.95}{998.08}$

Step4: Calculate and convert to percentage

Periodic Rate = $0.0260 \times 100 = 2.60\%$

Answer:

2.60%