## Related questions with answers

On January $1$ the previous balance for Lynn's charge account was $\$ 569,80$. On the following days, purchases were posted:

January $13 \quad \$ 38.50 \quad$ jewelry January $21 \quad \$ 44.56 \quad$ clothing

On January $16$ a $\$ 50$ payment was posted. Using the average daily balance method, find the finance charge and unpaid balance on February $1$ if the bank charges interest of $1.5 \%$ per month.

Solution

VerifiedRecall that the formulas for finding *Finance charge* and *New balance* are defined by

$\begin{equation} \text{Finance charge}=\text{Average daily balance}\cdot\text{Interest rate}, \end{equation}$

$\begin{aligned} \text{New balance}&=\text{Previous balance}+\text{Finance charge}\\ \end{aligned}$

$\begin{equation} +\text{Purchases and cash advances}-\text{Payments and credits}. \end{equation}$

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