—Tiath 1050 credit Card Debt Assignment Name Beau Stach 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 lsts the APR (Annual Percentage Rate) for your balance to be 14.4%. 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: AER OM 012 2 2 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. Round each answer to the nearest cent. Month Old Balance Interest Payment, New Balance 1 $2000.00 $24.00 $25.00 $1999.00. 2 $1999.00 $23.99 $25.00 3 1997.99 N35 $25.00 4 S996, I7 23.96 $25.00 5 $25.00 6 $25.00 7 $25.00 8 $25.00 9 $25.00 10 $25.00 41 $25.00 12 $25.00 2, What is the total amount that has been paid to the credit card company at the end of the first year? 2090-1987 1g (ald 300 £2.92 [300 3. How much of the original balance has been paid off at the end of the first year? 2009 -1997,19 ae bl 2.82 Scanned with CamScanner‘Math 1050 Credit Card Debt Assignment Name 4. From looking at the new balances over the frst year, how many years do you think it will take to pay off the $2000? (Thisis a guess so there is no wrong answer. before moving.on, write down your best estimate.) Zoou_ - 45 Sy eC Ib yeas 5. A formula for calculating the payment, P?, required to pay off a debt of amount Din M months with monthly interest rate i is eeu -(14iy" Solve this formula for M , where M is the number of months it will ake to pay off a debt D. Attach all your work in solving for M to the end of this assignment. eg FH) =5(045) P M 6. Use your formula for Mf to fill n the following table for the given values of P, using D=$2000.00 and Attach all your work to the end of this assignment. 12. Monthly Payment P- $25.00 $50.00 $75.00 Goud sweden eee 269.08 m| Sy92,| 32.3 (oias ners a, 22.5y6 | Wbyes | 27 ve (oudtonenrat dour)” KE me.25 [go THs 2424.05 7. (a) How large would your monthly payment have to be in order to pay off your debt in 12 months? Round up to the ~— lhrags) ee {b) Whatis the total amount paid to the credit card company, rounded to the nearest dollar? (rasX(n) = Scanned with CamScannerPith 1050 Credit Card Debt Assignment Name 8. What is the best plan for paying off the $2000? Why? The best Plan would be fo Pay the §2000 14 Fullinone month iP Oassible, TRS Hil Linch inderesd 40 2000. 9. What is the worst plan? Why? T? ONY Pay the minim AS Yor wovll onl be deduced pbort \ dolor Craw Your debt ever/ OVO Ky 10. What should you doif you cannot afford to make the payments required bythe best plan? Pvdged do 92k the pes Plas for rou: Priovtize yovr deBk md Pur OS much Pndy ihas Yay Lory 111. What are two things that the average consumer can learn by completing this assignment? Wow tollig interest 3 On debit gurd oF brlavce not Reid enh, W Credit Cord compres ore inthe business gf oak dN not Fimncial hele Scanned with CamScannerp. On) nz toy (Cceeleee) Ht) Az lep(emoeen)),) 4 1A) ~e9 (+912) “ear Ee t 7 ~lv9(.012) 4.62 " ' moe 2ouXol2 Hoy Bin tegen). ( P ~O.00s es. 1019. f -1) 269% TA, o12) 040)( 612) 2. 3 Ko ey ie ry 1p Sere He, = and Leake) =o FH) Tao) aay . m2 92H) era ay / Scanned with CamScanner