Solve the problem. Round to the nearest cent.
-The unpaid balance in an account on December 1 was $174. A payment of $45 was made on December 18. The finance charge rate was 1.2% per month of the average daily balance. Find the
Finance charge for the month of December.

Question

Quizplus · Accepted Answer

The average daily balance is calculated by taking the sum of the daily balances and dividing by the number of days in the month. For December 1-17, the balance was $174. After the payment on December 18, the balance for December 18-31 was $129. The average daily balance is thus $\frac{(174 \times 17) + (129 \times 13)}{31}$. This equals $\frac{2958 + 1677}{31} = \frac{4635}{31} = 149.516$. The finance charge is 1.2% of this average daily balance, so $149.516 \times 0.012 = 1.794192$, which rounds to $1.84.

Solve the Problem. Round to the Nearest Cent