MAT101: Week 4 Assignment Details Page 1 Week 4 Assignment: Credit Card Fees and Charges Assignment Overview Credit cards are like carying a small loan in your wallet or purse. You are able to pay for items that you might not have available cash or sufficient funds in your checking account to purchase. The bank or other institution that issues the credit card knows that many individuals are satisfied with paying the minimum payment due. In this assignment, you will use a method called "average daily balance" to calculate the minimum payment due for a credit card. You will be replicating the process a bank may use to determine finance charges and minimum payments due on a credit card. Assignment Details: Perform the following tasks: Complete the reading assignment and the interactive lesson before attempting this assignment. Attend the instructor session to prepare for this assignment. Use this document to calculate the charges fora credit card with a local bank. According to the tems and conditions of the card: o This credit card has an annual percentage rate (APR) of 15%. o A method called "average daily balance (including new purchases)" is used to calculate your balance. o The due date is 30 days after the close of each billing cycle. You will not be charged interest on purchases if you pay your entire balance by the due date of each billing cycle. o The minimum payment each month is computed as 1% of the new balance achieved at the end of a billing cycle, rounded up to the nearest $5. Follow the instructions and enter your responses in the appropriate places. Calculations must be free of mathematical errors. Use the single billing cycle with the following information: o The previous balance was $1389.21 and the billing cycle began on April 10. o You made a minimum payment of $15 on April 21. You made a purchase on April 22 for $251.99 and another on May 1 for $77.65. Submit Week 4 Assignment via Blackboard by clicking on the "Week 4 Assignment" link. Include the proper file naming convention: MAT101_wk4_assn_jsmith_mmddyyyy. MAT101: Week 4 Assignment Details Page 2 Perform the following tasks: 1. Find the average daily balance by completing steps a-e below. a. The billing cycle began on April 10. The next billing cycle of 30 days starts on May 10. The previous balance of $1389.21 is indicated in the table below. b. Complete the following register for the credit card billing cycle using the information below. o You made a minimum payment of $15 on April 21. You made a purchase on April 22 for $251.99 and another on May 1 for $77.65. o Note: Enter the unpaid balance for each day of the cycle; each space in the third column will have a number, Register Date Transactions Unpaid Balance April 10 April 11 April 12 April 13 1389.21 April 14 April 15 April 16 April 17 April 18 April 19 April 20 April 21 April 22 April 23 April 24 April 25 April 26 April 27 April 28 April 29 April 30 May May 2 May 3 May 4 May 5 May 6 May 7 May 8 May 9 1 Page 3 MAT101: Week 4 Assignment Details Enter your answers in this column. Perform the following tasks (continued): C. At the end of the billing cycle, what is the unpaid balance? d. Add all 30 numbers in the third column and write the total here. e. Divide the total found in step d by the number of days (30) in the billing cycle. The result is the average daily balance. 2. Find the finance charge for this billing cycle by completing steps a-b below. a. Since the annual percentage rate is 15%, divide this number by 12 to find the monthly percentage rate. The monthly percentage rate is used to find the finance charge per billing cycle. Write your answer as a decimal without the percent symbol. b. Determine the finance charge by multiplying the monthly percentage rate found in part a by the average daily balance found in #1e. Write this number to the right as a monetary value (2 decimal places). This is the finance charge. 3. Find the new balance for this billing cycle. Start with the previous cycle's balance; add the finance charge, add purchases, and subtract any payments. This is the new balance. 4. What will be the minimum payment for this billing cycle? Remember that the minimum payment each month is 1% of the new balance, rounded up to the nearest $5. Grading: Points Points Grading Criteria Possible Earned Register - Step 1b Enter all transactions correctly, including new unpaid balance. 5 points Unpaid Balance - Step 1c Prepare new unpaid balance at the end of billing cycle. 5 points Calculations - Step 1d 10 points Add all numbers in the third column. Average Daily Balance - Step 1e 10 points Provide the average daily balance. Finance Charge/Billing Cycle - Step 2a 10 points Provide the monthly percentage rate; answer is written as a decimal. MAT101: Week 4 Assignment Details Page 1 Week 4 Assignment: Credit Card Fees and Charges Assignment Overview Credit cards are like carying a small loan in your wallet or purse. You are able to pay for items that you might not have available cash or sufficient funds in your checking account to purchase. The bank or other institution that issues the credit card knows that many individuals are satisfied with paying the minimum payment due. In this assignment, you will use a method called "average daily balance" to calculate the minimum payment due for a credit card. You will be replicating the process a bank may use to determine finance charges and minimum payments due on a credit card. Assignment Details: Perform the following tasks: Complete the reading assignment and the interactive lesson before attempting this assignment. Attend the instructor session to prepare for this assignment. Use this document to calculate the charges fora credit card with a local bank. According to the tems and conditions of the card: o This credit card has an annual percentage rate (APR) of 15%. o A method called "average daily balance (including new purchases)" is used to calculate your balance. o The due date is 30 days after the close of each billing cycle. You will not be charged interest on purchases if you pay your entire balance by the due date of each billing cycle. o The minimum payment each month is computed as 1% of the new balance achieved at the end of a billing cycle, rounded up to the nearest $5. Follow the instructions and enter your responses in the appropriate places. Calculations must be free of mathematical errors. Use the single billing cycle with the following information: o The previous balance was $1389.21 and the billing cycle began on April 10. o You made a minimum payment of $15 on April 21. You made a purchase on April 22 for $251.99 and another on May 1 for $77.65. Submit Week 4 Assignment via Blackboard by clicking on the "Week 4 Assignment" link. Include the proper file naming convention: MAT101_wk4_assn_jsmith_mmddyyyy. MAT101: Week 4 Assignment Details Page 2 Perform the following tasks: 1. Find the average daily balance by completing steps a-e below. a. The billing cycle began on April 10. The next billing cycle of 30 days starts on May 10. The previous balance of $1389.21 is indicated in the table below. b. Complete the following register for the credit card billing cycle using the information below. o You made a minimum payment of $15 on April 21. You made a purchase on April 22 for $251.99 and another on May 1 for $77.65. o Note: Enter the unpaid balance for each day of the cycle; each space in the third column will have a number, Register Date Transactions Unpaid Balance April 10 April 11 April 12 April 13 1389.21 April 14 April 15 April 16 April 17 April 18 April 19 April 20 April 21 April 22 April 23 April 24 April 25 April 26 April 27 April 28 April 29 April 30 May May 2 May 3 May 4 May 5 May 6 May 7 May 8 May 9 1 Page 3 MAT101: Week 4 Assignment Details Enter your answers in this column. Perform the following tasks (continued): C. At the end of the billing cycle, what is the unpaid balance? d. Add all 30 numbers in the third column and write the total here. e. Divide the total found in step d by the number of days (30) in the billing cycle. The result is the average daily balance. 2. Find the finance charge for this billing cycle by completing steps a-b below. a. Since the annual percentage rate is 15%, divide this number by 12 to find the monthly percentage rate. The monthly percentage rate is used to find the finance charge per billing cycle. Write your answer as a decimal without the percent symbol. b. Determine the finance charge by multiplying the monthly percentage rate found in part a by the average daily balance found in #1e. Write this number to the right as a monetary value (2 decimal places). This is the finance charge. 3. Find the new balance for this billing cycle. Start with the previous cycle's balance; add the finance charge, add purchases, and subtract any payments. This is the new balance. 4. What will be the minimum payment for this billing cycle? Remember that the minimum payment each month is 1% of the new balance, rounded up to the nearest $5. Grading: Points Points Grading Criteria Possible Earned Register - Step 1b Enter all transactions correctly, including new unpaid balance. 5 points Unpaid Balance - Step 1c Prepare new unpaid balance at the end of billing cycle. 5 points Calculations - Step 1d 10 points Add all numbers in the third column. Average Daily Balance - Step 1e 10 points Provide the average daily balance. Finance Charge/Billing Cycle - Step 2a 10 points Provide the monthly percentage rate; answer is written as a decimal