Solve the problem.
-On the April 25 billing date, Malcolm had a balance due of $1507.63 on his credit card. The Transactions during the following month were: $$\begin{array} { l l r }
\text { April 26} &\text {Payment } & \$ 155.83 \
\text { April 30 } & \text { Charge: lawnmower } & \$ 214.56 \
\text { May 3 } & \text { Charge: gift } & \$ 79.46 \
\text { May 7 } & \text { Charge: furniture } & \$ 611.63
\end{array}$$
The interest rate on the card is 1.7% per month. Using the average daily balance method, find the Balance due on May 25 (April has 30 days).
A) $2283.08
B) $2291.64
C) $2290.79
D) $1540.97

Question

Solve the problem.
-On the April 25 billing date, Malcolm had a balance due of $1507.63 on his credit card. The Transactions during the following month were: $$\begin{array} { l l r } 
\text { April 26} &\text {Payment } & \$ 155.83 \
\text { April 30 } & \text { Charge: lawnmower } & \$ 214.56 \
\text { May 3 } & \text { Charge: gift } & \$ 79.46 \
\text { May 7 } & \text { Charge: furniture } & \$ 611.63
\end{array}$$
The interest rate on the card is 1.7% per month. Using the average daily balance method, find the Balance due on May 25 (April has 30 days).
A) $2283.08
B) $2291.64
C) $2290.79
D) $1540.97

Quizplus · Accepted Answer

The average daily balance is calculated by adding the balance each day of the month and dividing by the number of days in the month. The balance on April 25 is $1507.63. On April 26, Malcolm made a payment of $155.83, so the balance is now $1351.80. On April 30, Malcolm charged $214.56 for a lawnmower, so the balance is now $1566.36. On May 3, Malcolm charged $79.46 for a gift, so the balance is now $1645.82. On May 7, Malcolm charged $611.63 for furniture, so the balance is now $2257.45. The average daily balance for the month of May is $1882.54. The interest charged for the month is $1.7% of $1882.54, which is $31.81. The balance due on May 25 is $2257.45 + $31.81 = $2290.79.

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