Personal finance

Question

if the balance on Aaron's average balance checking account at the beginning of the last cycle was $400 and the only transaction for the cycle was a check that Aaron wrote for $200, which cleared exactly halfway through the cycle.  On what amount did Aaron's checking account pay interest last cyle?

Answer 1

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Answer 2

Assume that there are 31 days in the cycle.

    with a beginning balance of 400

 

            Daily

Day     Amount

1           400

2           400

3           400

4           400

5           200  the balance is  200 as there is a debit of 200 on day 5

so here we can see each day the balance is 400 except the fifth day there is a debit of 200.

Now, let's look at this 400 for 4 days. We can now compute this into a math equation

400(4) =1600

 

Since your statement said that this was the only withdrawal of 200 and ONLY one check of 200, then the remainder of the month from day 5 to 31 is 200 each day.

 

6 of the month

7 of the month

8 of the month

...  through

       the

31  day of the month

 

Now, lets look at the second step.

31 - 5 is 26 days remaining of the month. Now, you must add 1 day to that because 26 + 4 is 30 days.  However, you must add 1 day to 30 to make up for 31 days.  Therefore, 26 days +  is 27.  A balance of 200 for 27 can be calculated as 

 

200 balance for 27 x 200 is 5400

 

So, now add 1600

and              5400

                 _______

                   7000

 

Last step 7000 divided my 31 days is 225.81 for your final average daily balance.   I rounded this figure off. 

 

I hope this has helped you.

Thanks for the question.

 

Greg Darnell

via WyzAnt