Questions: Susan has a credit card with an APR of 8.8%. For the billing period ending on June 5, average daily balance (ADB) on her credit card was 108.26. What is monthly finance charge for that billing cycle? State your answer in terms of dollars, rounded to the nearest cent, but do not include a sign or the word "dollars" with your response.

Susan has a credit card with an APR of 8.8%. For the billing period ending on June 5, average daily balance (ADB) on her credit card was 108.26. What is monthly finance charge for that billing cycle?

State your answer in terms of dollars, rounded to the nearest cent, but do not include a sign or the word "dollars" with your response.

Transcript text: Susan has a credit card with an APR of $8.8 \%$. For the billing period ending on June 5, average daily balance (ADB) on her credit card was $\$ 108.26$. What is monthly finance charge for that billing cycle? State your answer in terms of dollars, rounded to the nearest cent, but do not include a \$ sign or the word "dollars" with your response.

Solution

Solution Steps

Step 1: Identify the Annual Percentage Rate (APR)

The APR given is 8.8%.

Step 2: Convert APR to Monthly Rate

To find the monthly interest rate, divide the APR by 12. \[ \text{Monthly Rate} = \frac{8.8\%}{12} = 0.7333\% \]

Step 3: Convert Monthly Rate to Decimal

Convert the percentage to a decimal by dividing by 100. \[ \text{Monthly Rate (Decimal)} = \frac{0.7333}{100} = 0.007333 \]

Step 4: Calculate the Monthly Finance Charge

Multiply the average daily balance (ADB) by the monthly rate in decimal form. \[ \text{Monthly Finance Charge} = 108.26 \times 0.007333 = 0.7938 \]

Step 5: Round to the Nearest Cent

Round the result to the nearest cent. \[ \text{Monthly Finance Charge} \approx 0.79 \]

Final Answer

0.79

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