Answer:
a) To determine the finance charge on April 22nd using the previous balance method, follow these steps:
Previous balance = $600
Monthly interest rate = 2% or 0.02
Finance charge = Previous balance x Monthly interest rate
Finance charge = $600 x 0.02
Finance charge = $12
Therefore, the finance charge on April 22nd using the previous balance method is $12.
b) To determine the new account balance on May 22nd using the finance charge found in part (a):
New balance = Previous balance + Finance charge
New balance = $600 + $12
New balance = $612
Therefore, the new account balance on May 22nd is $612.
Therefore, the finance charge by using the average daily balance method is $4.32.
d) To determine the new account balance on May 22nd using the finance charge in part (c):
New balance = Previous balance + Finance charge
New balance = $600 + $4.32
New balance = $604.32
Therefore, the new account balance on May 22nd using the finance charge from the average daily balance method is $604.32.
Step-by-step explanation:
