Math 1050 Credit Card Debt Assignment name Atryele Leishrig 4 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 requite 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 _ 0.145 = = 0.012083 (22) 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 53 2 $1999.17 | F202 ~Eifer.33 | tt 3 Fizee. 33 I 25.08 pl?ee.dy |e 4 ee 1¢ 2S. 08 Wisse. oz | 5 fi776. 6 fe Fie Wiets.75 | 6 {| tes fer U.eF Td 1 eq EE RE @ [fest ee qt $25 9 f17?5-0 f 24. of B25-0° CS Te gir iL fige/-25 | § 74oF {25> [Seema Omo2e | er eO — What is the total amount that has been paid to the credit card company at the end of the first year? How much of the original balance has been paid off atthe end of the first year? #1062 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 2 guess so there is no wrong answer. Before going on to step 2, write down your best estimate.) (99 vesMath 1050 Credit Card Debt Assignment Name Jerie k LeBhnan 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 (+i) Using this formula, solve for Mf 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 fort assignment to the end.) Z¥S.0F% mem bly How long is this in years, rounded to the nearest tenth of a year? 25-6 yeas Whats the total amount paid to the creditcard company, rounded to the nearest dolar? ¥ 1077.00 3. How many months will be required to pay off the debt if you pay $50 each month? Round to two decimal places. 54-44 months How long is this in years, rounded to the nearest tenth of a year? 4-6 yeas What is the total amount paid to the credit card company, rounded to the nearest dollar? HZ 249.20 4, How many months will be required to pay off the debt if you pay $75 each month? Round to two decimal places. 52. FF months How long is ths in years, ounded to the nearest tenth of a year? Zs ‘What is the total amount paid to the credit card company, rounded to the nearest dollar? yeas os x 2name Bbrele Lerhvon 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 ‘Math 1050 Credit Card Debt Assignment. nearest cent. fi [S0.0% What is the total amount paid to the credit card company, rounded to the nearest dollar? G2, 60. ‘6. What is the best plan for paying off the $2000? Why? Te pay it of m le months because you will artourt of mie res Chlco-<2) What is the worst plan? Why? Te make the mime monthly $5:07> maleont over 25.6 yeas pynen& bea What should you do if you cannot afford to make the payments required by the best plan? con each amth & aver Pay a> much as you bo muck mee resk 7. What are two things that the average consumer can learn by completing this assignment? Be conkel abouk pomg mbo debt, especall, wth ertdits cards "Pay off wm berest accunula xe debls as peekly AS “poss ible ti