Question

Find the average daily balance if the balance after the grace period was $12,000, and a payment of $3,000 was made on the 16th day. Assume that the month is 30 days long.

a) $8,700

b) $9,000

c) $9,500

d) $10,000

Answer 1

The average daily balance calculation results in $10,200, which is not listed as one of the options. A review of the calculation or question parameters might be necessary, as an error could exist in the provided options.

Step-by-step explanation:

The average daily balance is calculated by

• Summing up the daily balances
• Dividing by the number of days in the period

For the first 15 days, the balance is $12,000. After a payment of $3,000 is made on the 16th day, the balance for the remaining 14 days would be $12,000 - $3,000 = $9,000.

Therefore, the sum of the daily balances would be:

(15 days * $12,000) + (15 days * $9,000) = $180,000 + $126,000 = $306,000

Average daily balance = Total sum of daily balances / Total number of days

Average daily balance = $306,000 / 30 days = $10,200

However, since $10,200 is not one of the options provided, it's important to go back and verify if there was an error in the calculation or a misinterpretation of the question. If such scenario arises, you could contact your instructor or review the question parameters as a typo or mistake might be present in the provided multiple-choice answers.