Dream
2012-09-19 16:11:44 UTC
Store A calculates its principal using the average daily balance method; that is, the principal is the average daily balance of all unpaid charges.
Store B uses the past due balance method; that is, the principle is the amount left unpaid from the last month.
Kayla expects that she will make payments every month, but that she will have an unpaid balance in some months.
I need help with these three questions.
a. Which Method will result in a greater principal in some months? Explain.
b. To which store should Kayla apply for a charge card? Why?
c. Assume that the annual finance charge at store B is 2% less that at store A but that Kayla likes the merchandise better at Store A. For which store should she get a charge card and Why?