Answer
See below
Work Step by Step
(a)
Now, compute the average daily balance using the equation as shown below:
\[\begin{align}
& \text{Average daily balance}=\frac{\text{Sum of unpaid balances for each day in the billing period}}{\text{Number of days in the billing period}} \\
& =\frac{\$61,716.63}{30}\\&\approx\$2,057.22\end{align}\]
(b)
Compute the amount of interest payable using the equation as shown below:
\[\begin{align}
& \text{Interest}=\left( \text{Average daily balance} \right)\times \left( \text{Interest rate} \right)\times \left( \text{Time} \right) \\
& =\$2,057.22\times0.012\times1\\&=~\$24.69\end{align}\]
(c)
Compute the amount of balance due as on 1st July using the equation as shown below:
\[\begin{align}
& \text{Balance due as on July }{{\text{1}}^{\text{st}}}=\text{Balance due}+\text{Interest} \\
& =\$2,212.54+\$24.69\\&=\$2,237.23\end{align}\]
(d)
The amount of balance due as on July 1st is \[\$2237.23\] which is more than\[\$400\], so the customer has to pay off the balance due.
\[\begin{align}
& \text{Minimum monthly payment}=\frac{\text{Balance due}}{25} \\
& =\frac{\$2,237.23}{25}\\&\approx\$90\end{align}\]
