Financial Algebra 1st Edition Chapter 4 Consumer Credit
Page 195 Problem 1 Answer
Given about Carrie’s card
To do: Find how much is Carrie responsible for paying
Under the act of truth lending, there is a maximum liability of 50 $
so, Carrie is responsible for paying 50 $
Therefore, Carrie is responsible for paying 50 $
Page 196 Problem 2 Answer
Given about the paul last month payments
To do: Find the average daily balance
From the given data we have x dollars for 6 days means 6x
y dollars for 12 days means 12y
w dollars for q days means qw
d dollars for 2 days means 2d then the average will be 6x+12y+qw+2d/q+20
Therefore,the average daily balance is 6x+12y+qw+2d/q+20
Page 196 Problem 3 Answer
Given about steve finance
To do: Express his finance charge
From the given data APR is p % so, p/12 and here average daily balance is d $
Then the finance charge will be (p/100/12)d
Therefore, the finance charge is (p/100/12)d
Page 197 Problem 4 Answer
Given that Life was a lot simpler when what we honored was father and mother rather than all major credit cards. – Robert Orben, American Comedy Writer
To do: Interpret the quote
In the given quote we have horned by parents i.e., mother and father which means that while using credit cards we should have enough money in the cards as stores won’t honor your cards and the credit card makes easy for life
Therefore, the quote says that While using credit cards we should have enough money in the cards as stores won’t honor your cards and the credit card makes easy for life
Page 197 Problem 5 Answer
Given that Janine’s credit card was stolen, and the thief charged a $44 meal using it before she reported it stolen
To do: Find how much of this is Janine responsible for paying
Given that the card was stolen and before it was charged $44 as we know that the maximum liability will be $50 then Janine have to pay the entire amount i.e.,44 $
Therefore, Janine has to pay $44
Page 197 Problem 6 Answer
Given that Dan’s credit card was lost on a vacation. He immediately reported it missing.
The person who found it days later used it and charged $x worth of merchandise on the card, where x> $200
To do: Find how much of the $x is Dan responsible for paying
From the given question we get to know that Dan reported as soon it was lost i.e. before used so that he is responsible for paying $0
Therefore, Dan is responsible to pay $0
Page 197 Problem 7 Answer
Given that Felix was given a card with an APR of 12 %
To do: Find his monthly percentage
Given APR=12 % and we know that there are 12 months in a year then we get monthly percentage rate=12/12
=1 %
Therefore, His monthly percentage rate is 1 %
Page 197 Problem 8 Answer
Given that Oscar was given a card with an APR of 15 %
To do: Find his monthly payment
Given that APR=15 % and we know that number of months in a year are 12
Then Monthly percentage rate=15/12
=1.25 %
Therefore, the monthly percentage rate is 1.25 %
Page 197 Problem 9 Answer
Given the credits of Felix and oscar
To do: Find how much more would Oscar pay than Felix
Solving for Felix From part a we know that the monthly percentage rate is 1 % then Finance charge=1 %×800 $
=8 $
Solving for Oscar From part b we know that the monthly percentage rate is 1.25 % then Finance charge=1.25 %× $800
=10 $ the difference between them is 2 $
Therefore, Oscar has to pay 2 $ more than Felix
Page 197 Problem 10 Answer
Given all the finance charges per days
To do: Find the average daily balance
The sum of the daily balances is
9(778.12)=7003.08
8(1876)=15008
4(2112.50)=8450
10(1544.31)=15443.1 is 45904.18 $ and the total number of days given is 9+8+4+10=31
Now the average daily balance will be 45904.18/31
=1480.78 $
Therefore, the average daily balance is 1480.78 $
Page 197 Problem 11 Answer
Given the finance charges with respect to the days
To do: Find the finance charge
From part a we know that the average daily balance is 1,480.78 $
Now we have to find monthly percentage rate given APR=19.2 $
Monthly percentage rate = APR/ Number of months in a year
=19.2/12
=1.6 % then finance charge=1.6×1,480.78
=23.69 $
Therefore,The finance charge=23.69 $
Page 197 Problem 12 Answer
Given the set of daily balances
To do: Find the average daily balance
The sum of daily balances =number of days at balance×balance
so we get
=x×y+r×q+w×d+m×p
=xy+rq+wd+mp and number of billing days will be x+r+w+m
Then the average daily balance will be =xy+rq+wd+mp/x+r+w+m
Therefore, the average daily balance=xy+rq+wd+mp/x+r+w+m
Page 197 Problem 13 Answer
Given Suzanne’s average daily balance and finance charge
To do: Find the monthly percentage rate
Given average daily balance=x
finance charge=y then monthly percentage rate=y/x
Therefore,The monthly percentage rate=y/x
Page 197 Problem 14 Answer
Given the data on Suzzanne’s income
To do: Find APR From the previous part, we know that the monthly percentage rate=y/x and
we know that the annual percentage will consider 12 months multiplying with it we get12y/x which is the APR
Therefore,the APR=12y/x
Page 197 Problem 15 Answer
Given Jared’s income details
To do: Find the monthly percentage rate
From the given data we know that the average daily basis is 560 $ the finance charge is 8.12 $
Then monthly percentage rate= finance charge/average daily basis
on substituting we get
=8.12/560
=1.45 %
Therefore, the monthly percentage rate is 1.45 %
Page 197 Problem 16 Answer
Given Jared’s income details
To do: Find the APR
The annual percentage income is the multiplication of the monthly percentage rate and the number of months in a year
we know that the monthly percentage rate=1.45 % and we also know that there are 12
months in a year then
APR=1.45 %×12
=17.4 %
Therefore, APR=17.4 %
Page 198 Problem 17 Answer
Given Helene’s credit details
To do: Find her daily balance if she puts the down payment on the credit card today
Given that Today’s balance=712.0 $
down payment=5,000 $ then the daily balance will be712.0+5,000=5,712.0 $
Therefore,the daily balance is 5,712.0 $
Page 198 Problem 18 Answer
Given Helene’s credit details
To do: Find her average daily balance
We know that daily balance is 5,712.04 $ for 30 days it will be 5,712.04 $×30 then average daily balance=30×5,712.04 $/30
=5,712.04 $
Therefore,the average daily balance is 5,712.04 $
Page 198 Problem 19 Answer
Given Helene’s credit details
To do: Find the finance charge
We know that the daily balance is 5,712.04 $ and given APR=16.8 %
with this monthly rate will be 0.618/12
now finance charge=5,712.04×0.618/12
=79.97 $
Therefore,
Finance charge=79.97 $
Page 198 Problem 20 Answer
Given Helene’s credit card details
To do: Find her average daily balance
Given that for 29 days we have $712.04 and for a day we have $5712.04 then average daily balance is 29×$712.04+1×$5,712.04/30
=$878.71
Therefore,the average daily balance is $878.71
Page 198 Problem 21 Answer
Given Helene’s credit card details
To do: Find the finance charge
We know that the average daily balance= $878.71 and APR=0.168/12 then
the finance charge will be $878.71×0.168/12
=$12.30
Therefore,the finance charge is $12.30
Page 198 Problem 22 Answer
Given Helene’s credit card details
To do: Find how much can she save in finance charges
We have the finance charge for the billing period is $79.97 and the finance charge for the average daily balance is $12.30
we get $79.97−$12.30=$67.67
Therefore, She saves $67.67 finance charge
Page 199 Problem 23 Answer
Given the debit card register
To do: Find the missing values
The previous balance decreased by the payment amount will be the new balance
Following this we get
a.m−x
b.m−x−z
c.m−x−z−y
d.m−x−z−y−v
e.m−x−z−y−v+r
f.m−x−z−y−v+r−g
Therefore, the missing values are m−x,m−x−z,m−x−z−y,m−x−z−y−v,m−x−z−y−v+r,m−x−z−y−v+r−g
Page 199 Problem 24 Answer
Given that Jill’s credit card was stolen. The thief charged a900 $ kayak on the card before she reported it stolen
To do: Find how much of the thief’s purchase is Jill re
The maximum liability will be $50 for which she is responsible
Therefore,Jill is responsible for 50 $
Page 199 Problem 25 Answer
Given that Jill’s average daily balance would have been 1,240 $ without the thief’s purchase
To do; Find the sum of her daily balances
The product of the number of days and average daily balance will give the daily balances then we get
30×$1,240=$37,200
Therefore, The sum of her daily balances is 37,200 $
Page 199 Problem 26 Answer
Given that Jill’s credit card was stolen. The thief charged a 900 $ kayak on the card before she reported it stolen
To do: Find the sum of Jill’s daily balances
From the data, we get that before thief purchase we have 1,240 $ after thief purchase is 2,140 $ then the sum of Jill’s balances is
20×$1,240+10×$2,140=$46,200
Therefore,the sum of Jill’s balances is=46,200 $
Page 199 Problem 27 Answer
Given that Jill’s credit card was stolen. The thief charged a900 $ kayak on the card before she reported it stolen
To do: Find the average daily balance
Using the balance which we have previously increased by the thief’s purchase is the average daily balance we get
20×$1,240+10×$2,140=$46,200 when divided by the number of days we get
$46,200/30
=$1,540
Therefore, the average daily basis is 1,540 $
Page 199 Problem 28 Answer
Given Kristin’s credit details
To do: Find the finance charge
Firstly we have x×12%/12=x×1% and after the arrival of x we get x×13.2%/12
=x×1.1% the difference between these two will be x×1.1%−x×1%=x×0.1%
=0.001x
Therefore, the increase in this month’s finance charge is 0.001x
Page 199 Problem 29 Answer
Given data of credit card bill
To do: Find the total amount of overchange
The product of overcharge per credit card with the number of months is the total amount of debtors then we get
6×1,000,000×12×5=$360,000,000
Therefore,the total amount of overchange is =$360,000,000
Page 199 Problem 30 Answer
Given daily balances of Naoko
To do: Find the finance charge
Tha Naoko will not need to pay finance charges for next month then the September bill will be 0 $
Therefore,the finance charge for September month is 0 $
Page 199 Problem 31 Answer
Given the daily balances of Naoko
To do: Explain why the credit card company need to calculate his average daily balance
Naoko’s September bill is 0 $ which means we don’t have to pay any finance charges then the average daily balance is not needed
Therefore,there is no need to calculate average daily balance
Page 199 Problem 32 Answer
Given Naoko’s daily balances
To do: Find average daily balance
Firstly the sum of daily balances is
=2×99.78+15×315.64+11×515.64+2×580.32
=11,766.84 and the number of billing days will be 2+15+11+2=30
Now the average daily balance is =11,766.84/30
≈392.23
Therefore, the average daily balance is 392.23 $
Page 199 Problem 33 Answer
Given: Naoko daily balances
To do: Find the mistake of average daily balance
We have to calculate as all the number of daily balances with 4 then we get
=99.78+315.64+515.64+580.32/4
=1,511.38/4
≈377.85
now we got the correct answer
Therefore, the mistake he made is by summing all the balances and not dividing with 4