Question

Question 1 (8 points) This problem nvolves credit cards that calculate interest using the Average daily balance method. The monthly interest rate is 1.5% of the Average daily balance. Each exercise shows transactions that occurred during the March 1-March 31 billing period. In each exercise, a. Fill in the blanks in the table. Then find the Average daily balance for the billing period. Round to the nearest cent. Transaction description Previous balance, $6240.00 March 1 Billing date March 5 Payment March 7 Charge: Restaurant 40 March 12 Charge: Groceries 90 March 21 Charge Car Repairs $230 March 31 End of billing period Payment Due Date: April 9 Transaction amount Balance $6240 $300 credit After completing the table: Average daily balance: b. Find the interest to be paid on April 1, the next billing date. Round to the nearest cent. c. Find the balance due on April 1 d. This credit card requires a $10 minimum monthly payment if the balance due at the end of the billing period is less than $360. Otherwise, the minimum monthly payment is 36 thity suth of the balance due at the end of the billing period, rounded up to the nearest whole dollar. What is the minimum monthly payment due by April 9?

Answer 1

	Calculation of monthly average balance
					balance outstanding for no. of days
	Date	Opening balance	Txn	Closing bal		Total
	1-Mar	$6,240	$0	$6,240	4	$24,960
	5-Mar	$6,240	-$300	$5,940	2	$11,880
	7-Mar	$5,940	$40	$5,980	5	$29,900
	12-Mar	$5,980	$90	$6,070	9	$54,630
	21-Mar	$6,070	$230	$6,300	11	$69,300
					Total	$190,670
					No.of days	31.00
					Avg.bal	$6,150.65
					Finance charge @ 1.5%	$92.26
a)	Average daily balance		=	$6,150
b)	Interest		=	$92.26
c)	Balance due on apr 1		=	Ending balance + finance chrge
			=	$6300+92.26
			=	$6,392.26
d)	Since balance is more than $360,
	The payment req.		=	6392/36
			=	$177.56
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