Math 1050 Credit Card Debt Assignment Name k v KS y JASLY You have received your monthly credit card statement and must now deal with the financial realities of last month's birthday celebration. While your milestone in years was deserving of a celebration, dealing with the $2000 in credit card charges will require some planning. Your credit card statement lists the APR (Annual Percentage Rate) for your balance to be 14.5%. This is the yearly interest rate the credit card company uses in calculating interest due on your balance. The credit card company compounds interest monthly. Your monthly interest rate on credit card charges will be: jockey 0-145 ~ 0.012083 12 12 The minimum payment required by your credit card company is $25/month. Assuming that you do not make any new charges to your account, answer the following questions to help you determine the best plan for paying off this credit card debt. 1. To begin with, let’s check out the plan of only paying the minimum amount due each month. To get a feel for how this will affect the balance, finish filling in the following table using the minimum monthly payment of $25. Month Old Balance Interest Payment New Balance. 1 $2000.00 $24.17 $25.00 $1999.17 2 $1999.17 24 o 57 17948533, 3 {492,% 24 tS 95,0 19971, Ua 4 1945, Ug Dy. aioe 1996, U2 Ss 4 aly, a2 24.19 AGO. pees. 6 445.7 24.11 poe 1444. 24 | a 444. 2t 24.10 57S 1943.40 8 2943, Vo ZY OF gs? 1243.05 9 194365 24.08 Dea RAZA NS 10 1442. 1 24.07 25.0 i241. 20 1 (441, 26 24. Ol 25.% 1770.26 | 12 19940.2f ZY. 05 iene 19327, 3) | What is the total amount that has been paid to the credit card company at the end of the first year? #200 How much of the original balance has been paid off at the end of the first year? b 10.69 From looking at the new balances over the first year, how many years do you think it will take to pay off the $2000? (This is a guess so there is no wrong answer. Before q on to step 2, write down your best estimate.)Math 1050 Credit Card Debt Assignment Name Ae Qt CJM SEV 2. A formula for calculating the payment, P, required to pay off a debt of amount Din M months with monthly interest rate i is (1+i) Using this formula, solve for M_ to determine the number of months it will take to pay off the $2000 credit card debt with minimum monthly payments of $25. Round the number of months to two decimal places. (Attach all work for this plait ay m= In(- Baer peBlght® ‘ ») . m= EC oe SG eo (293.12 = In (141) a) | \ ents. How long is this in years, rounded to the nearest tenth of a year? os 3 lo ; ears \ 4 What is the total amount paid to the credit card company, rounded to the nearest dollar? 3. How many months will be required to pay off the debt if you pay $50 each month? Round to two decimal places. in (-2000 0.012083 1) Me SO aH (1 + ffe.01208y How long is this in ae nearest tenth of a year? 4 iG Va) What is the total amount paid to the credit ca company, Ei to the nearest dollar? Can 4. How ae months will be required to pay off the debt if you pay $75 each month? Round to two dec we” ( 2ecetese SRI OILERS) How long is this in years, rounded to the nearest tenth of a year? ae What is the total amount paid to the credit card company, rounc othe So paleMath 1050 Credit Card Debt Assignment Name — AISA ane, onths? Round up to the next 5. How large would your monthly payment have to be in order to pay off your debt nearest cent. _ 2000 + 0,01208% a /e P —aenanesy? * [ # [80.06 "ire ae > What is the total amount paid to the credit « ded to the nearest dollar? C Hail 6. What is the best plan for paying off the $2000? Why? ‘s h: ie is best 1 it off in one of the plans or em malar ier, \ Ne He, the a. pur WowAa be +o Save He 2000 abst of me ard avoid we cards ‘ast a (That's what \ do) cy What is the worst plan? Why? The worst pr is 9, Hee mininwn monty ae cain pee. a “Pas almost fusatiuple What should you do if you cannot afford to make the payments required by the best plan?, Pay the Wighist paymsnt mM can ak i jek rhdses” Yn cant oe ( m a Mreke card! \ 3 7. What are two things that the average consumer can learn by completing this assignment? i Avoid oredrct card Appt as much aS possible | | | Give ) Dor purchases ( nm up Wwst nce & oredit Card, pay oF ate aL. OS garg as possible’Solve. tor Ms (=C+)™ P(1-( (+t) =" -Go = — eae =O. + fs (1+iy" 2 wh m) 2. -M in (Iti) = tn (-24 D-¢ [wo In (- (bts —in¢