Question

Laura’s credit card has an apr of 12.04%, and it computes finance charges using the daily balance method and a 30-day billing cycle. on june 1st, laura had a balance of $606.40. she made exactly one transaction in june: a payment of $55.25. if laura’s finance charge for june was $5.71, on which day did she make the payment? a. june 8th b. june 12th c. june 15th d. june 20th please select the best answer from the choices provided a b c d

Answer 1

The day she did make the payment is closest to June 20th.

Finance Charge = (Average Daily Balance * APR * Number of Days in Billing Cycle) / 365

We will use this to find out on which day Laura made the payment in June.

1. On June 1st, Laura had a balance of $606.40.

2. She made the payment of $55.25, so for the rest of the month, her balance was $606.40 - $55.25 = $551.15.

3. June has 30 days.

The Average Daily Balance:

= ($606.40 * 1 + $551.15 * 29) / 30

= ($606.40 + $15,981.35) / 30

= $16,587.75 / 30

= $552.925.

Finance Charge = (Average Daily Balance * APR * Number of Days in Billing Cycle) / 365

$5.71 = ($552.92.5 * 0.1204 * Number of Days in Billing Cycle) / 365

Solving for the Number of Days in Billing Cycle

Number of Days in Billing Cycle = ($5.71 * 365) / ($552.925* 0.1204)

= 31.3066256

= 31.3066256

= 31.