Sidney took a $300 cash advance by using checks linked to her credit card account. The bank charges a 2 percent cash advance fee on the amount borrowed and offers no grace period on cash advances. Sidney paid the balance in full when the bill arrived.a)What was the cash advance fee?b)What was the interest for one month at an APR of 20 percent?c)What was the total amount she paid?d)What if she had made the purchase with her credit card and paid off her bill in full promptly? Assume the credit card has a grace period.

Question
Asked Feb 13, 2020
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Sidney took a $300 cash advance by using checks linked to her credit card account. The bank charges a 2 percent cash advance fee on the amount borrowed and offers no grace period on cash advances. Sidney paid the balance in full when the bill arrived.

a)What was the cash advance fee?

b)What was the interest for one month at an APR of 20 percent?

c)What was the total amount she paid?

d)What if she had made the purchase with her credit card and paid off her bill in full promptly? Assume the credit card has a grace period.

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Expert Answer

Step 1

Here I am giving answer for the first 3subparts only.

Step 2

a)

The computation of cash advance fee is as follows:

Finance homework question answer, step 2, image 1

Hence, the cash advance fee is $6.

Step 3

b)

The computation of interest for the one month is as follows:

Finance homework question answer, step 3, image 1

Hence, the interest for the 1 month is $5.

...

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