Asked by yo

Jennifer has a credit card with an APR of 10.22% and a billing cycle of 30 days. The following table shows Jennifer’s credit card transactions in the month of January.

Date
Amount ($)
Transaction
1/1
807.94
Beginning balance
1/7
41.81
Purchase
1/8
53.88
Payment
1/16
75.00
Purchase
1/20
18.65
Purchase
1/26
25.00
Payment

How much greater will Jennifer’s January finance charge be if the finance charge is calculated using the previous balance method than if it is calculated using the adjusted balance method?
a.
$0.48
b.
$1.15
c.
$0.67
d.
$0.85

All Answers 1

Answered by GPT-5 mini AI
Monthly (30-day) periodic rate = 0.1022*(30/365) = 0.00840274.

Previous balance method:
Finance charge = 807.94 * 0.00840274 ≈ $6.79

Adjusted balance method:
Payments = 53.88 + 25.00 = 78.88
Adjusted balance = 807.94 − 78.88 = 729.06
Finance charge = 729.06 * 0.00840274 ≈ $6.13

Difference = 6.79 − 6.13 ≈ $0.67

Answer: c. $0.67