Math 1050 Credit Card Debt Project Name Util Wt VO 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: APR PMS 0.012083 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 his 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, Ie 5 v0 1944.3 3 144%4.3> 24.15 ae) 14a q ig 4 M474 2o. It Zope 194 ew? 5 (4G we gv. 13, A) 1945.7 6 144 6,7 wy tl Th, vo 199 1, FH 7 149 4 44 UY 10 LG, 00 493 14 8 1443.44 U0 EMS) 144 3, 07 9 1443,07 U1. 04 26,00 (442, 1S 10 1442.15 M. 07 25.60 (441 th i 1441,.27% 2M ou 20, 90 lay, & 22 N4qo, 2% L4.0S 25. 1944. 33 es What is the total amount that has been paid to the credit card company at the end of the first year? HUES bee been pmad bo PM credib cared “Ompary How much of the original balance has been paid off at the end of the first year? $1067 hes bets par ef oF b GtL ewe ub the year 1m 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.) 24 yearsMath 1050 Credit Card Debt Project Name 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 D-i P= pe —(1+iy" 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 assignmenttothe end.) win [Pape ) o\n (252 neeats 0 12043, ) . e = ~ Va C4 (0,0 12043) In (iad) VX 243.17 How long is this in years, rounded to the nearest tenth of a year? 2O.GO yoors What is the total amount paid to the credit card company, rounded to the nearest dollar? VS 12=*ROO peg yene 4ov Xx 13.GO = PLEO A 47040 dollars 3. How many months will be required to pay off the debt if you pay $50 each month? Round to two decimal places. a\q (52 =tewe too tons) ) \n (4 0.02063 ) me 54.98 How long is this in years, rounded to the nearest tenth of a year? Lb eveld take approx US$ yours What is the total amount paid to the credit card company, rounded to the nearest dollar? Spx1L too COOXH.S4 WUINE e174 4, How many months will be required to pay off the debt if you pay $75 each month? Round to two decimal places. =n (2S2 Bow Lo ovtowa) ) ee ma 2 1 (14 0,012 083 % 3239 m= How long is this in years, rounded to the nearest tenth of a year? Sbwodd take appboxinalely 2,70 yoers What is the total amount paid to the credit card company, rounded to the nearest dollar? 45x17 8400 goox 2.70 2430Math 1050 Credit Card Debt Project Name 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 nearest cent e~ ai pov (o,0129%3) Pa 140,04 - I= Civo.onensy ® (isc Vove payment nevld Bere be be appromimately W 180.04 What isthe total amount paid to the credit card company, rounded to the nearest dollar? 14,04 KID = LO .4G fokel aroont pad bo He credit ward Com pany vod be 2/1048 6. What is the best plan for paying off the $2000? Why? Tht tok ptan For Paying oF Foe 2000 doles, would be to pry rt Oke WW TL months. You ere prying the Seales : oon” 19g. oralltgk amonk uf mbrtst which 16 What is the worst plan? Why? The worek plan world he to josh male Ehe minimum payment. T+ willl Fake the longest Hime, which ts approxinalely 2% years to pay off. Also Yor ere paying The must mteresh. ‘What should you do if you cannot afford to make the payments required by the best plan? Ray more Hein He minitmn paynenke Th more Yoo pay He smaller the Compooncling interes, 7. What are two things that the average consumer can learn by completing this assignment? i The Fresh thing 18 how twmpos neling interest works, You at being Chered font halen of yoor credit cord Query month. Trig beok to pay off yore credi tearel monbalyy ii, The HL Orel thing Wowld be to pay more then fhe Minmoe pay mnt: The srrniler He joalanw He less imbust you will be chergad the Following. month,