Answer
ADB= 8145.16
Problem Statement
The question tells us to calculate the Average Daily Balance (ADB) for a period of December 1 - December 31 using the balances given in the table.
Method
To find the Average Daily Balance (ADB), we apply the formula given below:
[tex]\text{ADB}=\sum ^n_{i=1}\frac{(\text{Balance after Day}_i)}{Total\text{ number of days in Billing cycle}}[/tex]
The question has given us the Balance after Day 1 - Day 10 (10 days) to be 11,000. We are also given that the Balance from Day 11 to Day 20 (10 days) is 8000, from Day 21 to 30 (10 days), the Balance is 5500 while Day 31 (1 day) with a balance of 7500.
The total number of days in the billing cycle is from Day 1 to Day 31, which is 31 days altogether.
Thus we can use the above formula to find the Average Daily Balance (ADB).
Implementation
[tex]\begin{gathered} \text{ADB}=\frac{(10\times11,000)+(10\times8,000)+(10\times5,500)+(1\times7,500)}{31} \\ \\ \text{ADB}=\frac{252,500}{31} \\ \\ \therefore ADB=8,145.16 \end{gathered}[/tex]
Final Answer
The Answer is:
ADB= 8145.16
