What is the monthly finance charge if the average daily balance is $20, the daily periodic rate is 0.04%, and the number of days in the cycle is 30?

Accepted Solution

Answer-The monthly finance charge will be $0.24 or 24 cents.Solution-We know that,[tex]\text{Finance charge}=\dfrac{\text{Balance}\cdot \text{APR}\cdot \text{Number of days in billing cycle}}{365}[/tex]As here, daily periodic rate is 0.04%, i.e [tex]\dfrac{\text{APR}}{365}=0.04\%=0.0004[/tex]Putting the values in the formula,[tex]\text{Finance charge}=20\times 30\times 0.0004=\$0.24[/tex]