Question
Asked Nov 7, 2019
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Assume no purchases or returns are made in the exercise given below.
 
At the beginning of a​ 31-day billing​ period, Sandra Lazzaro has an unpaid balance of
​$730
on her credit card. Three days before the end of the billing​ period, she pays
​$600
Find her finance charge at
3.4%
per month using the average daily balance method.
The finance charge for Sandra Lazzaro is
​$
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Expert Answer

Step 1

Sandra Lazzaro has a unpaid balance of $730. $730 was available for 31 days; Just 3 days before the billing cycle, she paid $600.

Her current balance becomes = $730- $600 = $130 

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Balance 730 Duration 28 20,440 130 3 390 31 20,830 Average Daily Balance Interest Finance Charge 671.94 0.034 22.85

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Step 2

Now $130 is available for 3 days i.e. 31-28 = 3 days.

We multiply 730*31= $20,44...

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Behavioral Finance

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