12
QuizMultiple Choice

Finance Charges

Question 12 • FowU - Financial Math - B

Michael has a credit card with an APR of 15.33%. It computes finance charges using the daily balance method and a 30-day billing cycle. On April 1st, Michael had a balance of $822.05. Sometime in April, he made a purchase of $77.19. This was the only purchase he made on this card in April, and he made no payments. If Michael’s finance charge for April was $10.71, on which day did he make the purchase?

Answer
A
April 5th
B
April 10th
C
April 15th
D
April 20th

Explanation

The daily rate is 15.33% ÷ 365. With no payments, the balance is $822.05 before the purchase and $899.24 after it. If the purchase is included in the daily balance on the day it is made, an April 20 purchase gives 19 days at $822.05 and 11 days at $899.24. The resulting finance charge is about $10.71, so the correct choice is April 20th.

AI-written and checked against the verified answer.

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