Final answer:
The answer is False. To determine the correct finance charge, the adjusted balance needs to be calculated. The finance charge is calculated using the adjusted balance and the monthly interest rate. Joe's claim is false because his calculated finance charge is incorrect.
Step-by-step explanation:
The answer is B. False.
To determine the correct finance charge, we need to calculate the adjusted balance first. The adjusted balance is the balance at the end of the billing cycle minus any payments received and credits applied during the billing cycle.
In this case, Joe assumes it takes 10 days for payment to be received and recorded. So, the adjusted balance would be the balance on the last day of the month minus the payment made on the 20th day of the month. Since the month has 31 days, the adjusted balance would be the balance on the 31st day minus the payment.
Once we have the adjusted balance, we can calculate the finance charge using the formula: Finance Charge = Adjusted Balance × Monthly Interest Rate. The monthly interest rate can be calculated by dividing the APR by 12. In this case, the monthly interest rate would be 13% ÷ 12 = 1.0833%.
Using the given information, the finance charge calculated using the adjusted balance method is $21.67. Therefore, Joe's claim of being correct is false.