Answer
See below
Work Step by Step
(a)
Now, compute the average daily balance using the equation as shown below:
\[\begin{align}
& \text{Average daily balance}=\frac{\text{Sum of unpaid balances for each day in the billing period}}{\text{Number of days in the billing period}} \\
& =\frac{\$534,921.58}{30}\\&\approx\$17,830.71\end{align}\]
(b)
Compute the amount of interest payable using the equation as shown below:
\[\begin{align}
& \text{Interest}=\left( \text{Average daily balance} \right)\times \left( \text{Interest rate} \right)\times \left( \text{Time} \right) \\
& =\$17,830.71\times0.012\times1\\&=~\$213.96\end{align}\]
(c)
Compute the amount of balance due as on 1st July using the equation as shown below:
\[\begin{align}
& \text{Balance due as on July }{{\text{1}}^{\text{st}}}=\text{Balance due}+\text{Interest} \\
& =\$20,166.82+\$213.96\\&=\$20,380.78\end{align}\]
(d)
The amount of balance due as on July 1st is $20, 341.10 which is more than $400, so the customer has to pay off the balance due.
Compute the monthly payment as shown below:
\[\begin{align}
& \text{Minimum monthly payment}=\frac{\text{Balance due}}{25} \\
& =\frac{\$20,380.71}{25}\\&=\$815.23\end{align}\]
