A charge account had a balance of $940 on May 5. A purchase of $230 was made on May 17, and a payment of $150 was made on May 20. The interest on the average daily balance is 1.7% per month. Find the finance charge on the June 5 bill. (Round your answer to the nearest cent.)
$ 

To find the finance charge on the June 5 bill, we’ll calculate the average daily balance from May 5 to June 5 and then apply the 1.7% monthly interest rate to that balance.

### Step 1: Calculate the average daily balance

#### Time Periods and Balances
1. **May 5 – May 17 (12 days):**  
   Balance = $940

2. **May 17 – May 20 (3 days):**  
   Balance = $940 + $230 = $1170

3. **May 20 – June 5 (16 days):**  
   Balance = $1170 - $150 = $1020

#### Calculate the Average Daily Balance
The average daily balance is calculated by multiplying each balance by the number of days it was held, summing these values, and then dividing by the total number of days.

\[
\text{Average Daily Balance} = \frac{(940 \times 12) + (1170 \times 3) + (1020 \times 16)}{31}
\]

Calculating each part:

- $940 \times 12 = 11280$
- $1170 \times 3 = 3510$
- $1020 \times 16 = 16320$

So,

\[
\text{Average Daily Balance} = \frac{11280 + 3510 + 16320}{31} = \frac{31110}{31} = 1003.55
\]

### Step 2: Calculate the Finance Charge
Using the 1.7% monthly interest rate:

\[
\text{Finance Charge} = 1003.55 \times 0.017 = 17.06
\]

### Answer
The finance charge on the June 5 bill is **$17.06**.

Would you like a deeper explanation on any part of this? Here are some additional questions to extend your understanding:

1. How would the finance charge change if a different interest rate were applied?
2. What effect would an additional purchase between May 20 and June 5 have on the finance charge?
3. How would the finance charge differ if payments or purchases were made on different dates?
4. Why is the average daily balance method commonly used by credit card companies?
5. How would a change in the balance calculation period affect the finance charge?

**Tip:** Understanding how average daily balance calculations affect finance charges can help in managing credit more effectively.

A charge account had a balance of $940 on May 5. A purchase of $230 was made on May 17, and a payment of $150 was made on May 20. The interest on the average daily balance is 1.7% per month. Find the finance charge on the June 5 bill. (Round your answer to the nearest cent.)

Learn to calculate the finance charge on a June 5 bill for a charge account with purchases and payments in May. The solution includes calculating the average daily balance and applying a 1.7% monthly interest rate. Suitable for Grades 10-12.

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