To find the finance charge for a charge account with an average daily balance of [tex]$1027.27 and a monthly interest rate of 1.473%, follow these steps:
1. Convert the monthly interest rate to a decimal form:
The monthly interest rate is given as 1.473%. To convert a percentage to a decimal, divide by 100.
\[ \text{monthly interest rate} = \frac{1.473}{100} = 0.01473 \]
2. Calculate the finance charge:
To find the finance charge, multiply the average daily balance by the monthly interest rate (in decimal form):
\[ \text{finance charge} = \text{average daily balance} \times \text{monthly interest rate} \]
\[ \text{finance charge} = 1027.27 \times 0.01473 \]
3. Compute the finance charge:
Performing this multiplication:
\[ 1027.27 \times 0.01473 = 15.1332271 \]
4. Round to the nearest cent:
The finance charge should be rounded to the nearest cent. Thus, we round 15.1332271 to two decimal places.
\[ \text{finance charge} \approx 15.13 \]
So, the finance charge for the account is $[/tex]15.13.
