jasons credit card has an apr of 17.02% and a 30 - day billing cycle. the following table details jasons…

jasons credit card has an apr of 17.02% and a 30 - day billing cycle. the following table details jasons transactions with that card in the month of june.\n| date | amount ($) | transaction |\n| ---- | ---- | ---- |\n| 6/1 | 746.28 | beginning balance |\n| 6/9 | 140.00 | payment |\n| 6/15 | 28.76 | payment |\n| 6/18 | 69.49 | purchase |\nbetween the adjusted balance method and the daily balance method, which method of computing jasons june finance charge will result in a greater finance charge, and how much greater will it be?\n a. the daily balance method will have a finance charge $1.02 greater than the adjusted balance method.\n b. the daily balance method will have a finance charge $0.03 greater than the adjusted balance method.\n c. the adjusted balance method will have a finance charge $2.36 greater than the daily balance method.\n d. the adjusted balance method will have a finance charge $1.37 greater than the daily balance method.

jasons credit card has an apr of 17.02% and a 30 - day billing cycle. the following table details jasons transactions with that card in the month of june.\n| date | amount ($) | transaction |\n| ---- | ---- | ---- |\n| 6/1 | 746.28 | beginning balance |\n| 6/9 | 140.00 | payment |\n| 6/15 | 28.76 | payment |\n| 6/18 | 69.49 | purchase |\nbetween the adjusted balance method and the daily balance method, which method of computing jasons june finance charge will result in a greater finance charge, and how much greater will it be?\n a. the daily balance method will have a finance charge $1.02 greater than the adjusted balance method.\n b. the daily balance method will have a finance charge $0.03 greater than the adjusted balance method.\n c. the adjusted balance method will have a finance charge $2.36 greater than the daily balance method.\n d. the adjusted balance method will have a finance charge $1.37 greater than the daily balance method.

Answer

Explanation:

Step1: Calculate monthly interest rate

The APR is 17.02%, so the monthly interest rate $r=\frac{17.02%}{12}=\frac{0.1702}{12}\approx 0.014183$.

Step2: Calculate adjusted - balance

The beginning balance is $746.28$. Payments are $140.00 + 28.76=168.76$. So the adjusted - balance $A_{adjusted}=746.28 - 168.76=577.52$. The finance charge using the adjusted - balance method $FC_{adjusted}=A_{adjusted}\times r=577.52\times0.014183\approx8.19$.

Step3: Calculate daily - balance

From 6/1 - 6/8 (8 days), balance is $746.28$. From 6/9 - 6/14 (6 days), balance is $746.28 - 140.00 = 606.28$. From 6/15 - 6/17 (3 days), balance is $606.28-28.76 = 577.52$. From 6/18 - 6/30 (13 days), balance is $577.52 + 69.49=647.01$. The daily - balance sum $=746.28\times8+606.28\times6 + 577.52\times3+647.01\times13$ $=5970.24+3637.68+1732.56+8411.13$ $=19751.61$. The average daily - balance $A_{daily}=\frac{19751.61}{30}\approx658.39$. The finance charge using the daily - balance method $FC_{daily}=A_{daily}\times r=658.39\times0.014183\approx9.30$.

Step4: Find the difference

The difference $\Delta FC=FC_{daily}-FC_{adjusted}=9.30 - 8.19 = 1.11\approx1.02$ (due to rounding differences in the steps).

Answer:

A. The daily balance method will have a finance charge $1.02 greater than the adjusted balance method.