Question

Calculate the monthly finance charge if the average daily balance is $20, the daily periodic rate is 0.05%, and the number of days in the cycle is 30.

Answer 1

The answer is $0.30 or 30 cents

Explanation:

From the question Given, we recall the following statement

The monthly finance charge if the average daily balance =$20

The daily periodic rate is =0.05%

The number of days in the cycle is =30

We solve for the monthly finance charge

We apply the monthly Finance Charge formula:

Monthly finance charge = Balance x APR x (Number of days)/365

Thus,

20 x 0.05% = 0.01

0.01 x 30 days = 0.30

Therefore the monthly finance charge is = $0.30 or 30cents or 30¢

Answer 2

$ 0.30

Explanation:

Given:

Average daily balance = $20

Daily period rate = 0.05%

Number of days in a cycle = 30 days

The formula to calculate the monthly Finance Charge is:

Monthly finance charge = Balance x APR x (Number of days)/365

We are given the Daily period Rate which is calculated as:

Daily period rate = APR/365

Therefore, we can write the above equation as:

Monthly finance charge = Balance x Daily Periodic Rate x Number of days

Using the given values, we get:

Monthly finance charge = 20 x 0.0005 x 30 = $ 0.30

Therefore, the monthly finance charge would be $ 0.30