Question

Victor Hernandez has a credit card that bases its finance charge on the average-daily-balance method-new purchases included. His monthly periodic rate is 2.9% and his finance charge for the most recent billing cycle was $37. Find his average daily balance.

Answer 1

The appropriate formula is

... (finance charge) = (periodic rate) × (average daily balance)

Fill in the given numbers and solve.

... $37.00 = 0.029 × (average daily balance)

... $37.00/0.029 = (average daily balance) ≈ $1275.86