Calvin's credit card computes finance charges using the daily balance method. His card has a billing cycle of 30 days and an APR of 14.75%. The following table details Calvin's transactions in the month of September.

Date

Amount ($)

Transaction

9/1

716.54

Beginning balance

9/7

84.94

Purchase

9/12

15.69

Purchase

9/20

200.00

Payment

What will Calvin's starting balance be next month?

a.

$617.17

b.

$624.74

c.

$625.91

d.

$623.52

Question

Jamie Stone

Mathematics

2 October, 09:55

Calvin's credit card computes finance charges using the daily balance method. His card has a billing cycle of 30 days and an APR of 14.75%. The following table details Calvin's transactions in the month of September.

Date

Amount ($)

Transaction

9/1

716.54

Beginning balance

9/7

84.94

Purchase

9/12

15.69

Purchase

9/20

200.00

Payment

What will Calvin's starting balance be next month?

a.

$617.17

b.

$624.74

c.

$625.91

d.

$623.52

+2

Answers (1)

Know the Answer?

Jaylee Rose · Answer 1

Average daily balance = ((716.54 x 7) + (801.48 x 5) + (817.17 x 8) + (617.17 x 10)) / 30 = (5015.78 + 4007.40 + 6537.36 + 6171.70) / 30 = $724.41

Finance charges = 721.10 x 0.1475/12 = $8.90

Starting balance for next month = $617.17 + $8.86 = $626.07