10.4 Installment Buying 629 a) Determine the average daily balance for the billing period. $512.00 b) Determine the finance charge to be paid on June 12. Assume an interest rate of 1.3% per month. $6.66 c) Determine the balance due on June 12. $638.43 40. Average Daily Balance Method The Levys’ credit card statement shows a balance due of $1578.25 on March 23, the billing date. For the period ending April 23, they had the following transactions. March 26 Charge: Party supplies $79.98 March 30 Charge: Restaurant meal 52.76 April 3 Payment 250.00 April 15 Charge: Clothing 190.52 April 22 Charge: Car repairs 190.85 a) Determine the average daily balance for the billing period. $1585.37 b) Determine the finance charge to be paid on April 23. Assume an interest rate of 1.3% per month. $20.61 c) Determine the balance due on April 23. $1862.97 41. Average Daily Balance Method Refer to Exercise 37. Instead of the previous balance method, suppose that Carol Ann’s bank uses the average daily balance method. a) Determine Carol Ann’s average daily balance for the billing period from February 3 to March 3. Assume it is not a leap year. $121.78 b) Determine the finance charge to be paid on March 3. $1.52 c) Determine the balance due on March 3. $133.07 d) Compare these answers with those in Exercise 37. * 42. Average Daily Balance Method Refer to Exercise 36. Instead of the previous balance method, suppose Verna’s bank uses the average daily balance method. a) Determine Verna’s average daily balance for the billing period from September 5 to October 5. $533.06 b) Determine the finance charge to be paid on October 5. $5.86 c) Determine the balance due on October 5. $903.61 d) Compare these answers with those in Exercise 36. * 43. A Cash Advance Dov borrowed $875 against his charge account on September 12 and repaid the loan on October 14 (32 days later). Assume that the interest rate is 0.04273% per day. a) How much interest did Dov pay on the loan? $11.96 b) What amount did he pay the bank when he repaid the loan? $886.96 44. A Cash Advance Tanya uses her credit card to obtain a cash advance of $600 to pay for her eyeglasses. The interest rate charged for the loan is 0.05477% per day. Tanya repays the money plus the interest after 27 days. a) Determine the interest charged for the cash advance. $8.87 b) When she repaid the loan, how much did she pay the credit card company? $608.87 45. Comparing Loan Sources Grisha needs to borrow $1000 for an automobile repair. State National Bank charges 5% simple interest on the amount borrowed for the duration of the loan and requires the loan to be repaid in six equal monthly payments. Consumer’s Credit Union offers loans of $1000 to be repaid in 12 monthly payments of $86.30. a) How much interest is charged by the State National Bank? $25 b) How much interest is charged by the Consumer’s Credit Union? $35.60 c) What is the APR, to the nearest half percent, on the State National Bank loan? 8.5% d) What is the APR, to the nearest half percent, on the Consumer Credit Union loan? 6.5% 46. Comparing Loan Options Sara wants to purchase a new television set. The purchase price is $890. If she purchases the set today and pays cash, she must take money out of her savings account. Another option is to charge the TV on her credit card, take the set home today, and pay next month. Next month she will have cash and can pay her credit card balance without paying any interest. The simple interest rate on her savings account is 5 %. 1 4 How much is she saving by using the credit card instead of taking the money out of her savings account? $3.89 Challenge Problems/Group Activities 47. Determining Purchase Price Ken bought a new car, but now he cannot remember the original purchase price. His payments are $379.50 per month for 36 months. He remembers that the salesperson said the simple interest rate for the period of the loan was 6%. He also recalls he was allowed $2500 on his old car. Determine the original purchase price. $14,974.55 48. Comparing Loans Suppose the Chans in Exercise 26 use a credit card rather than an installment loan to purchase furniture. They make the same down payment and make no additional purchases with their credit card. They pay $437 per month, including the first month, and start paying a Uber Images/Shutterstock *See Instructor Answer Appendix
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