Calculate the average daily balance, finance charge, and new balance using the average daily balance method.

Monthly rate = 1.25%

Date	Payments	Purchases	Balance	Number of Days	Product/Sum
9/1 - 9/5			$387.52	5	$1,937.60
9/6	$50.00		$337.52	1	$337.52
9/7 - 9/18			$

$
9/19		$62.26	$399.78	1	$399.78
9/20 - 9/30			$

11
$
Total				30	$
The average daily balance = 
 ÷ 30 = $
.

Finance charge = monthly rate x average daily balance = $
.

New balance = previous balance - payment/credits + finance charge + new purchases = $
.



Let's go step by step to complete this calculation:

### 1. **Filling in the missing balances and products**
We need to fill in the missing balance entries first, and then the product/sum column based on the number of days.

#### For 9/7 - 9/18:
The balance remains the same as the previous day's balance, which is $337.52. The number of days is $18 - 7 + 1 = 12$.

So, for 9/7 - 9/18:

- **Balance**: $337.52
- **Number of days**: 12
- **Product**: $337.52 \times 12 = 4,050.24$

#### For 9/20 - 9/30:
The balance after the purchase of $62.26 on 9/19 is $399.78, and it remains the same until 9/30 (11 days).

So, for 9/20 - 9/30:

- **Balance**: $399.78
- **Number of days**: 11
- **Product**: $399.78 \times 11 = 4,397.58$

#### Total:
Now, let’s calculate the total of the products:

\[
1,937.60 \, (\text{for 9/1 - 9/5}) + 337.52 \, (\text{for 9/6}) + 4,050.24 \, (\text{for 9/7 - 9/18}) + 399.78 \, (\text{for 9/19}) + 4,397.58 \, (\text{for 9/20 - 9/30}) = 11,122.72
\]

### 2. **Calculate the average daily balance:**
The total of the product column is $11,122.72$, and the total number of days in the month is 30.

\[
\text{Average daily balance} = \frac{11,122.72}{30} = 370.76
\]

### 3. **Finance charge:**
The finance charge is calculated by multiplying the average daily balance by the monthly interest rate.

\[
\text{Finance charge} = 370.76 \times \frac{1.25}{100} = 4.63
\]

### 4. **New balance:**
The formula for the new balance is:

\[
\text{New balance} = \text{previous balance} - \text{payment/credits} + \text{finance charge} + \text{new purchases}
\]

From the given information:
- Previous balance = $387.52 (the initial balance on 9/1)
- Payments/Credits = $50.00 (on 9/6)
- New purchases = $62.26 (on 9/19)
- Finance charge = $4.63

So:

\[
\text{New balance} = 387.52 - 50 + 4.63 + 62.26 = 404.41
\]

### Final Results:
1. **Average daily balance**: $370.76
2. **Finance charge**: $4.63
3. **New balance**: $404.41

Would you like more details or have any questions?

Here are 5 related questions for practice:
1. What would the finance charge be if the monthly interest rate was 1.5% instead of 1.25%?
2. How would the average daily balance change if an additional purchase was made on 9/15?
3. How does the average daily balance method differ from the adjusted balance method?
4. What would the new balance be if a second payment of $30 was made on 9/25?
5. How would a late payment fee affect the final balance calculation?

**Tip**: Always pay attention to the number of days in each period when calculating average daily balance, as it heavily impacts the final result!

Calculate the average daily balance, finance charge, and new balance using the average daily balance method.

Learn how to calculate the average daily balance, finance charge, and new balance using the average daily balance method. The solution includes key financial concepts such as interest calculation and balance management. Suitable for students in Grades 9-12 or anyone studying finance and credit management.

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