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Calculate the monthly finance charge for credit card

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Calculate the monthly finance charge for the credit card transaction. Assume that it takes 10 days for a payment to be received and recorded, and that the month is 30 days long. (Round your answers to the nearest cent.)

$500 balance, 16%, $50 payment
(a) previous balance method

(b) adjusted balance method

(c) average daily balance method

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(a) previous balance method
Since the annual rate is 16%, the monthly rate is 16%/12=4/300
Hence, using previous balance method, financial ...

Solution Summary

The solution gives detailed steps on computing the monthly finance charge for the credit card transaction using 3 methods. All formula and calcuations are shown and explained.