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Kurt borrowed $225 for 18 days on his credit card using a cash advance. His credit company charged a cash advance fee of $12 and a daily periodic interest rate of 0.054%. What was the total finance charge on the cash advance?

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Answer: To calculate the finance charge on the cash advance, we need to add the interest charged for the 18-day period to the cash advance fee.

First, let's calculate the interest charged. We can use the formula:

interest = principal * rate * time

where principal is the amount borrowed, rate is the daily periodic interest rate, and time is the number of days.

In this case, the principal is $225, the rate is 0.054% per day (expressed as a decimal, this is 0.00054), and the time is 18 days. So, we have:

interest = $225 * 0.00054 * 18 = $2.17

Therefore, the interest charged on the cash advance is $2.17.

Next, we need to add the cash advance fee of $12:

finance charge = $2.17 + $12 = $14.17

Therefore, the total finance charge on the cash advance is $14.17.

Explanation:

User Gyandeep Sharma
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