the following table shows the balance on a cr...
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 $=145\times0.015 = 2.175\approx2.25$