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A credit card account had a balance of $968 on May 5. A purchase of $295 was made on May 17, and a payment of $100 was made on May 20. The interest on the average daily balance is 1.7% per month. Find the average daily balance on the June 5 bill

User Bjou
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Answer:

The average daily balance on the June 5 bill is approximately $909.16.

Explanation:

To find the average daily balance on the June 5 bill, we need to calculate the balance for each day and then find the average of those balances.

Breakdown of the transactions:

Initial balance on May 5: $968

Purchase on May 17: -$295 (negative because it's an expense)

Payment on May 20: -$100 (negative because it's a reduction in the balance)

Calculate the daily balances:

May 5 to May 16 (12 days):

Initial balance: $968

Daily balance = $968

May 17 (1 day):

Balance after purchase: $968 - $295 = $673

Daily balance = $673

May 18 to May 19 (2 days):

Balance remains $673

Daily balance = $673

May 20 (1 day):

Balance after payment: $673 - $100 = $573

Daily balance = $573

May 21 to June 4 (15 days):

Balance remains $573

Daily balance = $573

Calculate the average daily balance:

Total days = 12 + 1 + 2 + 1 + 15 = 31 days

Sum of daily balances = (12 * $968) + ($673) + (2 * $673) + ($573) + (15 * $573) = $28144

Average daily balance = Sum of daily balances / Total days = $28144 / 31 ≈ $909.16

Therefore, the average daily balance on the June 5 bill is approximately $909.16.

User Gembird
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