Math 1050 Credit Card Debt Assignment Name Zac You have received your monthly credit card statement and must now deal with the fancial realities of last months birthday celebration. While your milestone in years was deserving ofa 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 _ 0.145 12 = 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, le’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 inthe following table using the minimum monthly payment of $25. Month ‘Old Balance Interest __New Balance $2000.00 $24.17 $1999.17 $1999.17 B/E $195 95 3, ALIS 4 (997,98 AY) 1996. 6, 1996 62 BULL, 445°, 7: Li 9 i 4 93.97 li A Or 141,21 199). z 1990.2. 1990. x Bi ‘What is the total amount that has been pald to the credit card company at the end of the first year? £300 How much of the original balance has been paid off at the end of the first year? $0.7 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.) 50 veMath 1050 Credit Card Debt Assignment Nome Zedmoy Cloustn 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 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 assignment to the end.) cata) (05) - ~ 3.40 973¢2 : — me Je —_ ~InCi+.010908) fine 273 2 How long is ths in years, rounded to the nearest tenth of a year? ‘What isthe total afiount pid to the creditcard company, rounded to the nearest dollar? 3. How many months will be required to pay off the debt if you pay $50 each month? Round to two decimal places. = BIS SA loa \ iy, = PBB SSA je SY mals How long is this in years, rounded to the nearest tenth of a year? What is the total amount paid to the credit card company, rounded to the nearest dollar? £2749 ] 4, How many months will be required to pay off the debt if you pay $75 each month? Round to two decimal places. mn . 3F84 22419 IMaage \ NI 232, Ih Thin) +) | nee) How long is this in years, rounded to the nearest tenth of a year? \ — es 2 L Whats the L Aes ald to the credit card company, rounded tothe nearest dolar? IF 2I29 uaa +1 |Math 2050 credit Card Debt Assignment name Zechouy Clouser 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, 2oo+i 24) E me 4blgo, i Wat sth total amount tothe ced card company, rounded othe ners oar? | $260 6. What is the best plan for paying off the $2000? Why? Te 1aro len bose Pe Jano the pore the more rr willbe pol bab, the tee the debh is leer 60 |e best b br ‘bobb as soo, + pa What is the worst plan? Why? The goy reed af YAS lrovese Hy bb) overt of rere ll by th ood 's 57060, puctiioo ow dellocg pod the the 12 rodth lon, Y ‘What should you do if you cannot afford to make the payments required by the best plan? oe with He second bef pe or Whelton ome onitel com he pod. 7. What are two things that the average consumer can learn by completing this assignment? « Duy tobe oF a loan fo he on ay 16 nol leorrey- vray br lh Or ah lest swt olin) it pt bool. ASAR - «NK deh oleh can be commnggrlol and day lth tonnone for soot tee baal Pfr ow Pom