Question

the opening balance of the january billing cycle for megan's credit card was $4805. if she makes a new purchase of $300 on the 20th of january and doesn't make any payments, what is her avrage daily balance?

A. $4,805.00
B. $4,955.00
C. $4,911.45
D. $5,105.23

Answer 1

To calculate the average daily balance for Megan's credit card, we need to determine the balance for each part of the billing cycle based on the transactions that occur.

1. **Opening Balance**: The opening balance at the start of January is $4,805.00.

2. **New Purchase on January 20th**: On January 20th, Megan makes a new purchase of $300, which increases her balance.

Let's break down the billing cycle:

- From January 1 to January 19 (19 days), the balance is $4,805.00.
- From January 20 to January 31 (12 days), the new balance is $4,805.00 + $300.00 = $5,105.00.

Now, we calculate the average daily balance:

1. **Calculate the total balance amount for each period:**

- For the first period (January 1 to January 19):
- Total balance = $4,805.00 * 19 days = $91,295.00

- For the second period (January 20 to January 31):
- Total balance = $5,105.00 * 12 days = $61,260.00

2. **Add the two totals together:**
- Total balance amount = $91,295.00 + $61,260.00 = $152,555.00

3. **Calculate the number of days in the billing cycle:**
- The billing cycle for January has 31 days.

4. **Calculate the average daily balance:**
- Average Daily Balance = Total balance amount / Number of days
- Average Daily Balance = $152,555.00 / 31 = $4,912.45

The correct option closest to this calculation is:

C. $4,911.45

Thus, the answer is **C. $4,911.45**.