You have been pricing a compact disk player in several stores. 3 stores have the identical price of $300. Each storecharges 18% APR, has a 30 day grace period, and sends out bills on the 1st of the month. On further investigation, you find that store A calculates the finance charge by using the average daily balance method, store B uses the adjusted balance method, and store C uses the previous balance method. Assume you purchased the disk player on May 5 and made a $100 payment on June 15. What will the finance charge be if you made your purchase from store A? From store B? From store C?
See the attached file. Thanks
Account Sheet for the Credits
Date Transaction Transaction Amount Closing Credit Balance No of days Closing credit*no of days
1-May Opening Balance $0 $0
5-May Purchases Made $300 $300 0.00 $0 Note: Till 31st May compact disk player will enjoy the grace period, as bills are produced on 1st June
31-May Closing Balance $300 15.00 $4,500
15-Jun Payments made $100 $200 15.00 $3,000
30-Jun Closing Balance $200 16.00 $3,200 ...
The solution compares costs of credit using calculation methods.