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On March 3, the balance on a credit card was $4,173.14. A payment of $320 was made on March 12, and a...

29. On March 3, the balance on a credit card was $4,173.14. A payment of $320 was made on March 12, and a charge of $83.54 was made on March 20. If the finance charge is based on a 1.5% interest rate, calculate the average daily balance on April 3.
☐ $4,116.56
☐ $4,409.60
☐ $123,496.90
☐ $3,983.77

Answer

To calculate the average daily balance, we need to consider the balance changes over the days in March:

  1. March 3-11 (9 days): Balance = $4,173.14
  2. March 12-19 (8 days): Balance after payment = $4,173.14 - $320 = $3,853.14
  3. March 20-31 (12 days): Balance after charge = $3,853.14 + $83.54 = $3,936.68

Now, calculate the average daily balance:

Average Daily Balance = [(9 days * $4,173.14) + (8 days * $3,853.14) + (12 days * $3,936.68)] / 29 days

Average Daily Balance = [(37,558.26) + (30,825.12) + (47,240.16)] / 29

Average Daily Balance = 115,623.54 / 29

Average Daily Balance = $3,983.57

Therefore, the closest option is:

☐ $3,983.77

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