Math 1050 Credit Card Debt Assignment ~ Spring 2015 name SOlncon futol ‘You have recelved 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 14.25%. jhe 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: APR 0.1825 _ you 1875 ieee 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 ths 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 filing in the following table using the minimum monthly payment of $25. Month | Old Balance Interest Payment ‘New Balance 1 ‘$2000.00 $23.75 $25.00 $1998.75 $1998.75 . ‘What isthe total amount that has been paid to the credit card company at the end of the first year? ws WH} B00 How much of the original balance has been paid off at the end of the first year? Wo 1945-97 = $ 16-01 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 going on to step 2, write down your best estimate.) LO + {urs ‘OO HI5, OA TA urs.Math 1050 Credit Card Debt Assignment ~ Spring 2015 Name Sur AU y/ A\ wuld 2. Aformuls for calculating the payment, P , required to pay off a debt of amount Din Af months with monthly interest rate i is Di P 1-(1+i)" Using this formula, solve for MM 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 additional work for this assignment to the end. = 10! 0/5) = 105 (si 0-0\Lo (09 (\ro- OVLORS How long is this in years, rounded to the nearest tenth of a year? a = Jy 6 years / What is the total amount paid to the credit card company, rounded to the nearest dollar? REE (3 4,079: 54 ) 3, How many months will be required to pay off the debt if you pay $50 each month? Round to two decimal places. “a9(-oorresy (eye) 09. F bts) _ (0-186795349!) MEG cane = ye = bad ©) V+ 0.0109) (Ooo) COUFLIGIHE)—/ Anonats How long is this in years, rounded to the nearest tenth of a year? sats = (Ass years ‘What is the total amount paid to the credit card company, rounded to the nearest dollar? Ru Piso, 4, How many months will be required to oy the debt if you pay $75 each month? Round to two decimal places. “(09 (- 002043 « Lo9%,, 0. \oy 1067 #66 — (09 (\¥ -vioys) BoUSCueNaN. i! How long is this in years, rounded to the nearest tenth of a year? ZEST HUT wears for T-F Years ee — What is the total amount paid to the credit card company, rounded to the nearest dollar? db vAr8+16 537 nagMath 1050 Credit Card Debt Assignment ~ Spring 2015 tome SO. Mnyadd 5. How large would your monthly payment have to be in order to pay off your debt in 12 months? Round up to the next neatestcent 7 os oe roo(ro4>) ZANF = UNF = bo69 Rel = “ECT ouoRy Ott)” corto (Fiwre? ‘What is the total amount paid to the credit card company, rounded to the nearest dollar? o00+33+ sr) = $24,790.32 6. What is the best plan for paying off the $2000? Why? LE x Wad Yo choose, F wordrd Wad CLOG AL UDF ORO ) OUCAUSY AuAy Td AL (as, ndd4 OULr Mal OVAgidl deb> Owed: ‘What is the worst plan? Why? THe fesy Wait 15 Worse Legauye Yor wil LE Voving aA wo 4 4000 MuS dolars on 42 yo\ of Aue original aby What should you do if you cannot afford to make the payments required by the best plan? Bu dys ino LESSER VOYnUA Warr Yoy Yo call atdord oiyf Hwa WA Yor HE diy off Wiyroud Yclng you MUO rge se 7. What are two things that the average consumer can learn by completing this assignment? i How $0 budbly Hue SINS beste go Hae cout 9 OF debiy GUA a oly a Finding wm Onde Card War an AVR Moar i955 Aap Who + yy Wore so Sou: OY don't ga mio Gby Toe, Catmoe Offord ix ‘ "AIO SLoug we wc toi : CONS commune! ¢ Coe WO cheddy 1S mranvY on Yours