Solve the problem.
-The unpaid balance in an account at the beginning of December was $222. A payment of $70 was made on December 20. No new purchases were made in December. The finance charge rate was
1.1% per month of the average daily balance. Find the new balance at the end 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 (assuming 31 days), the balance was $222 for 20 days (before the payment) and $152 ($222 - $70) for the remaining 11 days. The average daily balance is $\frac{(222 \times 20) + (152 \times 11)}{31} = \frac{4440 + 1672}{31} = \frac{6112}{31} = 197.16$. The finance charge is 1.1% of $197.16, which is $197.16 \times 0.011 = 2.17$. The new balance is the sum of the unpaid balance after the payment and the finance charge: $152 + $2.17 = $154.17. However, rounding to the nearest cent as per the options provided, the closest match is $154.14.

Solve the Problem. -The Unpaid Balance in an Account at the Beginning of the Beginning