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What is the average daily balance for this account? What is the finance charge for the month of March? What will the new months starting balance be?

What is the average daily balance for this account? What is the finance charge for the month of March? What will the new months starting balance be?

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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You have a credit card that charges an interest rate of 20.15% compounded monthly. The table below shows your activity for the month of March. Date Activity Amount Enter your search term March 1 Beginning Balance 736.60 March 4 Purchase 45.57 782.17 March 15 Payment -175.00 607.17 March 18 Purchase 96.33 703.50 March 25 Purchase 10.12 713.62 March 30 Purchase 25.81 739.43 March 31 Ending Balance 739.43 ****Open ABD Table and Enter Balance, Days held, and Interest Rate *** @ ADB Table [+] What is the average daily balance for this account? What is the finance charge for the month of March? What will the new months starting balance be?
Transcribed Image Text:You have a credit card that charges an interest rate of 20.15% compounded monthly. The table below shows your activity for the month of March. Date Activity Amount Enter your search term March 1 Beginning Balance 736.60 March 4 Purchase 45.57 782.17 March 15 Payment -175.00 607.17 March 18 Purchase 96.33 703.50 March 25 Purchase 10.12 713.62 March 30 Purchase 25.81 739.43 March 31 Ending Balance 739.43 ****Open ABD Table and Enter Balance, Days held, and Interest Rate *** @ ADB Table [+] What is the average daily balance for this account? What is the finance charge for the month of March? What will the new months starting balance be?
Expert Solution
Step 1

Finance Charge:

Finance charge implies the amount charged for the usage of credit.

 

Average Daily Balance:

It is a method to compute the interest amount by taking into consideration the balance amount invested/owed at the end of every day.

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