hannah has a credit card with an apr of 11.90% and a billing cycle of 30 days. the following table shows…

hannah has a credit card with an apr of 11.90% and a billing cycle of 30 days. the following table shows hannahs transactions in the month of april.\n| date | amount ($) | transaction |\n| ---- | ---- | ---- |\n| 4/1 | 322.95 | beginning balance |\n| 4/10 | 19.87 | purchase |\n| 4/14 | 50.00 | payment |\n| 4/19 | 71.21 | purchase |\nif hannahs credit card company calculates finance charges using the daily - balance method, what will her april finance charge be?\n a. $2.71\n b. $3.20\n c. $3.30\n d. $3.61

hannah has a credit card with an apr of 11.90% and a billing cycle of 30 days. the following table shows hannahs transactions in the month of april.\n| date | amount ($) | transaction |\n| ---- | ---- | ---- |\n| 4/1 | 322.95 | beginning balance |\n| 4/10 | 19.87 | purchase |\n| 4/14 | 50.00 | payment |\n| 4/19 | 71.21 | purchase |\nif hannahs credit card company calculates finance charges using the daily - balance method, what will her april finance charge be?\n a. $2.71\n b. $3.20\n c. $3.30\n d. $3.61

Answer

Explanation:

Step1: Calculate daily - balance for each period

  • From 4/1 - 4/9 (9 days): Balance = $322.95$, Daily - balance contribution = $322.95\times9 = 2906.55$
  • From 4/10 - 4/13 (4 days): Balance = $322.95 + 19.87=342.82$, Daily - balance contribution = $342.82\times4 = 1371.28$
  • From 4/14 - 4/18 (5 days): Balance = $342.82-50 = 292.82$, Daily - balance contribution = $292.82\times5 = 1464.1$
  • From 4/19 - 4/30 (12 days): Balance = $292.82 + 71.21=364.03$, Daily - balance contribution = $364.03\times12 = 4368.36$

Step2: Calculate the average daily balance

Total daily - balance contribution = $2906.55+1371.28 + 1464.1+4368.36=10110.29$ Average daily balance (ADB)=$\frac{10110.29}{30}\approx337.01$

Step3: Calculate the monthly interest rate

Annual Percentage Rate (APR) = 11.90% = 0.119. Monthly interest rate (r)=$\frac{0.119}{12}\approx0.00992$

Step4: Calculate the finance charge

Finance charge = ADB×r = $337.01\times0.00992\approx3.34\approx3.30$ (rounded to the nearest cent)

Answer:

c. $3.30$