Math 1050 Credit Card Debt Assignment Name Sorin Gutierves You have received your monthly credit card statement and must now deal withthe 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 14.5%. 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 12) fae = 0.012083 ‘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 1 $25.00 $1999.17 2 $1999.17 PAIN $15.00 AAG .33 si 1998.33, 424 15 $25.00 $109 7.4 4 $a. $24 14 26.00 $ 19.70.59, 5 $144.54 SDA12 $1500 HAG 571 6 Haas $24.1\ $2500 GAA. G2 Ez $244.2 424.10 | $2500 $1443 AD 8 $1143.42 $24.04 | $25.00 $1403. Ov 9 $1443.01 | __$2u. 0: $252.06 $1442.04 10 $1qa2.04 24.07 $25.00 $144.1 i Faas $24.09 $15.00 $1490.22 2 $1110.22 $tuoso Uh $2500 $1494.27 What isthe total amount that has been paid to the credit card company at the end of the first year? 25x 107$300 How much of the original balance has been paid off at the end of the first year? 2000 - 1494.91 = $10.73 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 @ guess so there is no wrang answer. Before going on to step 2, write down your best estimate.) ~ lon Yeare-Math 1050 Credit Card Debt Assignment Name 2. Aformula for calculating the payment, P, required to pay offa debt of amount Din M months with monthly Interest rate i is 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, assignmentie the end), 25[)-(\+0012002)") aad 4M Lal 012003" 0-03 2S" 1-U+0n003" 1-003 = a7 Mz ~ fn 0.0 bn 1.012065 -1.012093 =-.03 : 1012085 9.03 —~ M= 903,17 How long is this in years, rounded to the nearest tenth of a year? 28317 yearn What is the total amount paid to the credit card company, rounded to the nearest dollar? F217 Kia = B34R 04K 25> By4as] 3, How many months will be required to pay off the debt if you pay $50 each month? Round to two decimal places. Soll-.11acey") =2.4.11 7 dh dnel.01 308 3 Ln. .SIoué [-[.012095"=4B3y Me he Sloteb “1012088 epeee Ln. . Fliotet 1.01209 3"=St0g3 012082 How long is this in years, rounded to the nearest tenth of a year? 65; Yeara- \What isthe total amount paid to the credit card company, rounded to the nearest dollar? SF R1A= beo KS0= BAOS 4, How many months will be required to pay off the debt if you pay $75 each month? Round to two decimal places. JS= BE00+ 0.019083 -IS(l-(.(2083 Y=AYIT Abe loiaog3= be 08 t+ 0108" 1-6. 01900 3s , 32 Mz —Lne® 1.012063" 2-68 he to19003 1.0063" = 168 How long is this in years, rounded to the nearest tenth of a year? Ball Yeara- ‘What is the total amount paid to the credit card company, rounded to the nearest dollar? Ball Xe BBS. 32K TS = 28,944.90Math 1050 Credit Card Debt Assignment 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 P= _2022-0.0/2003 (1+,012065)* ef BYAP= D417 P=(90.07 ‘What is the total amount paid to the credit card company, rounded to the nearest dollar? #aloa 6. What isthe bes plan for paying off the $2000? Why? Payns $120 per mons, becavee you pei Hut Leaat in the Aon run ‘What is the worst plan? Why? Pawn) $25 permonth becauae you gnd ¢p paying He Moot vi Met fons rn ‘What should you do if you cannot afford to make the payments required by the best plan? 4 b Maat You Con Try to Pay Ut moat tha yey 7. What are two things that the average consumer can learn by completing this assignment? i. How much Money actvally goee into Pagrny He Credit card Company Hhrowgh interest © Ut taker forjer tran gov actrally expect to pay ob a Loan, A pccially ly makiny Are Pragrentar