Nancy Tai has recently opened a revolving charge account withMasterCard. Her credit limit is $1000, but she has not charged thatmuch since opening the account. Nancy hasn't had the time to reviewher monthly statements as promptly as she should, but over theupcoming weekend, she plans to catch up on her work.

In reviewing November's statement, she notices that herbeginning balance was $600 and that she made a $200 payment onNovember 10. She also charged purchases of $80 on November 5, $100on November 15, and $50 on November 30. She can't tell how muchinterest she paid in November because she spilled watercolor painton that portion of the statement. She does remember, though, seeingthe letters APR and the number 24%. Also, the back of her statementindicates that interest was charged using the average daily balancemethod including current purchases, which considers the day of acharge or credit.

Assuming a 30-day period in November, calculate November'sinterest using the average daily balance method. Also, calculatethe interest Nancy would have paid with: a) the previous balancemethod, b) the adjusted balance method.

Going back in time, when Nancy was just about to open heraccount, and assuming she could choose among credit sources thatoffered different monthly balance determinations, and assumingfurther that Nancy would increase her outstanding balance overtime, which credit source would you recommend? Explain.