Find the finance charge for a charge account with an average daily balance of $1027.27 and a monthly interest rate of 1.473%. Assume interest is calculated on the average daily balance of the account.

(Round to the nearest cent as needed.)



Answer :

To find the finance charge for a charge account with an average daily balance of [tex]$1027.27 and a monthly interest rate of 1.473%, follow these steps: 1. Convert the monthly interest rate to a decimal form: The monthly interest rate is given as 1.473%. To convert a percentage to a decimal, divide by 100. \[ \text{monthly interest rate} = \frac{1.473}{100} = 0.01473 \] 2. Calculate the finance charge: To find the finance charge, multiply the average daily balance by the monthly interest rate (in decimal form): \[ \text{finance charge} = \text{average daily balance} \times \text{monthly interest rate} \] \[ \text{finance charge} = 1027.27 \times 0.01473 \] 3. Compute the finance charge: Performing this multiplication: \[ 1027.27 \times 0.01473 = 15.1332271 \] 4. Round to the nearest cent: The finance charge should be rounded to the nearest cent. Thus, we round 15.1332271 to two decimal places. \[ \text{finance charge} \approx 15.13 \] So, the finance charge for the account is $[/tex]15.13.