How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Shawn P Adamo Your Own Question

Shawn P Adamo
Shawn P Adamo, CPA, Professor, CFP. CGMA, Business Consultant, Professor, PFS I have decades of experience answering these questions.
Category: Homework
Satisfied Customers: 2884
Experience:  CPA, Professor, CFP. CGMA, Business Consultant, Professor, PFS I have decades of experience answering these questions.
15641319
Type Your Homework Question Here...
Shawn P Adamo is online now
A new question is answered every 9 seconds

Calculate the monthly finance charge for the credit card transaction.

This answer was rated:

Calculate the monthly finance charge for the credit card transaction. Assume that it takes 10 days for a payment to be received and recorded, and that the month is 30 days long. (Round your answers to the nearest cent.)
$400 balance, 14%, $50 payment
(a) previous balance method
$ 1

(b) adjusted balance method
$ 2

(c) average daily balance method
$ 3

Shawn P Adamo :

working on it

Shawn P Adamo :

PREVIOUS BALANCE METHOD: P=500 r=0..14 t=1/12 I=Prt =500*0.14*1/12

Shawn P Adamo :

The adjusted balance method of calculating your finance charge uses your previous balance less any payments and credits made during the billing cycle. New charges are not factored into the adjusted balance. The periodic rate is applied to the adjusted balance to calculate the finance charge.

APR = 14%

Periodic rate = 14/12=1.16

Days in billing cycle = 30

Previous balance = $500

Payment 10th day = $50

Charge 20th day = ?

Ending balance = $500

Adjusted balance = $

Finance charge = Adjusted balance * periodic rate

= 350 * 0.0116
= $5.60

Shawn P Adamo :

The daily balance method of calculating your finance charge uses the actual balance on each day of your billing cycle. The rate applied is 1/365th of your APR. This is your daily rate. Finance charges are calculated by summing each day’s balance multiplied by the daily rate.

APR = 14%

daily rate = .0004

days in billing cycle = 30

daily balance = $500

finance charge = (Day 1 balance * daily rate) + ... + (Day 30 balance * daily rate)

= (400*0.0004*10) + (350*0.0004*20)
= $1.60 + 2.80


=4.40

Shawn P Adamo :

please let me know if yiou jave any questions

Customer:

thank you!

Shawn P Adamo :

Sorry.

Shawn P Adamo and 2 other Homework Specialists are ready to help you
THIS ANSWER IS LOCKED!

You need to spend $3 to view this post. Add Funds to your account and buy credits.