Dennis has a credit card with an APR of 10.14% and a billing cycle of 30 days. The following table shows his transactions with that credit card in the month of November.DateAmount ($)Transaction11/1517.87Beginning balance11/931.63Purchase11/2364.10Purchase11/2665.75PaymentIf the finance charge for November is $3.82, which method of calculating the finance charge does Dennis’s credit card company use?
D
there is not enough information to determine which method was usedWith the adjusted balance method, subtract the payment from the beginning balance and do not include the new purchases: $517.87 − $65.75 = $452.12. The monthly rate is 10.14% ÷ 12 = 0.845%, and $452.12 × 0.00845 ≈ $3.82. So the company uses the adjusted balance method.
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