roger has a credit card with an apr of 19.40% and a billing cycle of 30 days. the following table shows his…

roger has a credit card with an apr of 19.40% and a billing cycle of 30 days. the following table shows his transactions with that credit card in the month of june.\n| date | amount ($) | transaction |\n| ---- | ---- | ---- |\n| 6/1 | 265.40 | beginning balance |\n| 6/6 | 90.00 | payment |\n| 6/16 | 43.33 | purchase |\n| 6/22 | 37.71 | purchase |\nif rogers finance charge for june is $3.56, which method of calculating the finance charge does rogers credit card company use?\n a. daily balance method\n b. adjusted balance method\n c. previous balance method\n d. there is not enough information to determine which method was used

roger has a credit card with an apr of 19.40% and a billing cycle of 30 days. the following table shows his transactions with that credit card in the month of june.\n| date | amount ($) | transaction |\n| ---- | ---- | ---- |\n| 6/1 | 265.40 | beginning balance |\n| 6/6 | 90.00 | payment |\n| 6/16 | 43.33 | purchase |\n| 6/22 | 37.71 | purchase |\nif rogers finance charge for june is $3.56, which method of calculating the finance charge does rogers credit card company use?\n a. daily balance method\n b. adjusted balance method\n c. previous balance method\n d. there is not enough information to determine which method was used

Answer

Explanation:

Step1: Calculate finance - charge for previous balance method

The previous balance method uses the beginning balance to calculate the finance - charge. The monthly interest rate $r=\frac{APR}{12}=\frac{0.1940}{12}$. The beginning balance $B = 265.40$. The finance - charge $FC=B\times r=265.40\times\frac{0.1940}{12}\approx4.31$.

Step2: Calculate finance - charge for adjusted balance method

The adjusted balance = Beginning balance - Payment=265.40 - 90.00=175.40. The finance - charge $FC = 175.40\times\frac{0.1940}{12}\approx2.86$.

Step3: Calculate finance - charge for daily balance method

  1. Calculate the number of days for each balance:
    • From 6/1 - 6/5 (5 days), balance $B_1 = 265.40$.
    • From 6/6 - 6/15 (10 days), balance $B_2=265.40 - 90.00 = 175.40$.
    • From 6/16 - 6/21 (6 days), balance $B_3=175.40 + 43.33=218.73$.
    • From 6/22 - 6/30 (9 days), balance $B_4=218.73+37.71 = 256.44$.
  2. Calculate the daily - balance amount: $DB=(265.40\times5 + 175.40\times10+218.73\times6 + 256.44\times9)\div30=(1327+1754+1312.38+2307.96)\div30=(1327+1754+1312.38+2307.96)\div30 = 6701.34\div30 = 223.378$. The finance - charge $FC=223.378\times\frac{0.1940}{12}\approx3.56$.

Answer:

a. daily balance method