Question

What is the monthly finance charge if the average daily balance is $30, the daily periodic rate is 0.07%, and the number of days in the cycle is 30?

A. $0.63
B. $0.45
C. $0.21
D. $0.90

Answer 1

The monthly finance charge for an average daily balance of $30 with a daily periodic rate of 0.07% and a 30-day cycle is $0.63.

Step-by-step explanation:

To calculate the monthly finance charge when the average daily balance is $30, the daily periodic rate is 0.07%, and the number of days in the cycle is 30, we use the formula for finance charge calculation:

Finance Charge = Average Daily Balance × Daily Periodic Rate × Number of Days in the Cycle

Substituting the given values:

Finance Charge = $30 × 0.0007 × 30

Finance Charge = $0.63

Therefore, the monthly finance charge is $0.63, which corresponds to option A.