Final answer:
The average daily balance is calculated by summing the daily balances throughout October and dividing by 31 days, resulting in $141.09. The finance charge is found using this average balance and the monthly interest rate, coming to $0.294. The new balance on November 1 is $22.254.
Step-by-step explanation:
To calculate the average daily balance, we need to consider the balance each day throughout October and account for any changes due to transactions:
- October 1-4: $141.74 for 4 days
- October 5-21: ($141.74 + $69.22) for 17 days
- October 22-31: ($141.74 + $69.22 - $190.00) for 10 days
Now, we perform the calculation:
- (4 days * $141.74) + (17 days * $210.96) + (10 days * $21.96) = $567.96 + $3586.32 + $219.60 = $4373.88
The sum of the daily balances is $4373.88. To find the average, divide by the number of days in October:
Average daily balance = $4373.88 / 31 = $141.09.
Next, we calculate the finance charge using the average daily balance and the monthly interest rate (2.5% annual rate means approximately 0.2083% monthly rate):
Finance charge = $141.09 * 0.002083 = $0.294.
Finally, the new balance on November 1 can be found by adding the finance charge to the last balance:
New balance = $21.96 + $0.294 = $22.254.