Question

Payment for subscriptions is billed one month in advance. First month's payments are pro-rated for the amount due up until the 15th of the month plus the next month's bill amount. All monthly payments are due by the 15th of each month. Payments received after the 20th of the month will result in a late fee of $20.00. The late fee may be waived one time per year.

Answer 1

Answer: c. The subscription began about 10 days before the 15th of the month.

Explanation:

With the first month's payments being pro-rated for the amount due up until the 15th of the month plus the next month's bill amount payments, the likely possibility is that the customer started their first subscription 10 days before the 15th of the first month.

This would then mean that they were charged the daily rate for each of those 10 days which amounted to $15. The daily rate can be calculated by dividing $45 by 30 days because $45 is the rate for the month according to the question.

= 45/30

= $1.5 a day.