Question

# 3. The activity on Rusty Gates' MasterCard account for one billing period is shown below March...

3. The activity on Rusty Gates' MasterCard account for one billing period is shown below

March 23 sporting goods \$124.00

April 2 payment \$1200.00

April 10 bookstore \$246.00

a) Find the average daily balance if the billing period is March 16 through April 15 and the previous balance as \$4321.00 [March has 31 days.] Make a chart

b) Find the finance charge if the annual interest rate is 21.5%

a). Calculating the Average Daily Balance:-

 Date Purchase/(payment) Balance each day No of days till next transaction Outstanding Balance 16 Mar to 22 Mar 4321 4321 7 30247 23 Mar to 1 Apr 124 4445 10 44450 2 Apr to 9 April -1200 3245 8 25960 10 April to 15 April 246 3491 6 20946 Total 31 121603

Note- Outstanding Balance = No of days till next transaction*Balance each day

- Balance each day = Previous Balance each day +/- Purchase or (payment)

Average Daily Balance = Outstanding balance/Total no of days

= 121,603/31days

= \$ 3922.68 per day

b). Finance Charge = Average daily Monthly Balance*Annual Interest rate*Total no of day/365

= \$3922.68*0.215*31/365

= \$71.63

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