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Essay / Research Paper Abstract
This 3-page paper calculates credit card interest rate charges using daily average, previous balance and adjusted balance methods. Bibliography lists 1 source.
Page Count:
3 pages (~225 words per page)
File: D0_MTnancytai.rtf
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Unformatted sample text from the term paper:
revolving charge account with MasterCard and has a $1000 credit limit. In reviewing Novembers statement, she sees that her beginning balance
was $600, and shed made a $200 payment on November 10. She had charged purchase of $80 on November 5, $100 on November 14 and $50 on November 30. The
problem is, shes not sure how much interest has been paid in November because of an accident with watercolor paint. She does remember, however, an Annual Percentage Rate (or APR)
of 16%. Furthermore, on the back of her statement, it states that interest is charged using the average daily balance method. This includes current purchases that begin the day of
a charge or credit. In the first question, well assume a 30-day period in November and calculate Novembers interest using the average
daily balance method. The average daily balance method of calculating interest and other financing charges relies on the average of a balance
during the billing cycle (Irby, 2007). When determining the average daily balance, wed take the APR (which is 16%) and divide it into the cycle which, in this case, is
30 days long. In other words, she needs to total her balance from each day in the billing cycle, then divide it by the number of days in the cycle.
Heres how this would look: Opening Balance $600 Charges Day 5 $80 Day 14 $100 Day 30 $50 Payments Day 10 $200 This
means the daily balance from days 1-4 would be $600, totaling $2400 The daily balance from days 5-9 would be $620, totaling $2480 The daily balance from days 10-13 would
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