Question

A credit card calculates interest using the average daily balance method. The card charges 19.1% annual interest rate on the average daily balance. The following transactions occurred during the March 1 – March 31 billing period. Find the average daily balance for the billing period. Round to the nearest cent.

Can anyone help me to work through this problem and get the correct answer? Very Confused

Answer 1

well, since this is a 100 level class, i'll suppose.....

"The card charges 19.1% annual interest rate on the average daily balance.
so this means we need to convert annual interest rate down to a daily interest rate. But! the fact that the problem gives you this, "The average daily balance for the billing period is $6,205.16" means to me, we don't have to use a 'daily interest rate' but a 'monthly interste rate.
so,
r means monthly rate.
so,
r= 19.1%/12 = 1.5916667%

$6205.16 * 1.591667% = $98.76546333 is what is needed to be paid in interest for this month.
98.76546333, rounded to the nearest cent becomes
$98.77

Answer 2

are you sure you dont have to do that thing where you have to make a chart, and then add the interest or something to each and then add again? The videos are making me super confused on which formula you can and cannot use.

Answer 3

maybe im just over thinking it... it just seems too simple

Answer 4

Yeah I admit this stuff is really confusing. And I'm quite positive that you do not make the chart. However I do know that to check your answers over and feel positive in your brain is to list all information down into a chart. However no I would not say make a chart would be included.

Answer 5

ok thank you, i have like 8 other questions left haha if you can just help me depict which formula to use i can pretty much go from there

Answer 6

Yeah sure, ask away! :)

Answer 7

Compute the monthly payments for an add-on interest loan of $7,000, with an annual interest rate of 9 percent and a term of 1 year. Round to the nearest cent as needed.

Answer 8

Well let's see.. Simple add-on interest means that we add the interest so a principle of 7000 * 0.09 = 630. Since the term is only one year we should have a total repayment of 7630. There are 12 payments in the term so you divide your loan by the number of payments, 7630/12= 635.83 a month. (((( 43.05 )))))

Answer 9

wait why is the answer 43.05?

Answer 10

My correction.......... *635.83 I believe

Answer 11

OH! ok that makes way more sense hah