Use the Average Daily Balance Method to Compute the Amount

question 57

Multiple Choice

Use the average daily balance method to compute the amount of interest that will be charged at the end of the billing
cycle. Use a 365-day year.
-Month: February (28 days) Previous month's balance: $1240
Interest rate: 22%

• A) $15.96
• B) $19.71
• C) $18.22
• D) $8.31

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Definitions:

Dividend Yield

The financial ratio that shows how much a company pays out in dividends each year relative to its stock price.

After-Tax Cost Of Debt

The net cost to a company for borrowing funds, calculated by subtracting the tax savings from the cost of debt's interest payments.

Corporate Tax Rate

The tax imposed on the net income of a corporation, with the rate varying by country and sometimes also by the level of income earned.

Capital Component

One of the elements of a company's capital structure, such as equity or debt, which represents sources of financing.