Follow the link Average Dally Balance. This will direct you to a spreadsheet download that may be useful for checking your work for the exercise.

A credit card had an unpaid balance of $$877\mathrm{.}25$ on February $10.$ The following purchases were made: $$184\mathrm{.}69$ on February $15,$$$401\mathrm{.}58$ on February $16,$$$11\mathrm{.}70$ on February $18,$ and $$63\mathrm{.}27$ on

February $25.$ A payment of $$370$ was made on March $2.$ The annual interest on the average daily balance is $19\mathrm{.}3\%.$ Find the finance charge on the March $10$ bill. Assume it is not a leap year.

Step $1$

The finance charge on a credit card bill can be calculated in various ways. This problem starts with a bill with a due date of February $10$ and ends with a bill due on March $10.$ Therefore, we are calculating

a monthly finance charge.

The monthly finance charge is the product of three factors and is computed with the following equation.

Finance charge $=$ Average daily balance $*\frac{\text{A}\text{n}\text{n}\text{u}\text{a}\text{l}\text{i}\text{n}\text{t}\text{e}\text{r}\text{e}\text{s}\text{t}\text{r}\text{a}\text{t}\text{e}}{365}*No.of$ days $in$ billing cycle

We will determine each component in the equation.

The annual interest rate is given in the problem as $19\mathrm{.}3\%,$ but the equation will need a decimal. To rewrite a percent as a decimal, move the decimal point two places to the left and remove the percent

sign.

Determine the annual interest rate $($as a decimal$).$