, Math 1050 Credit Card Debt Assignment Name LSG0C_kihStho-er 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 $1900 in credit card charges will require some planning. Your credit card statement lists the APR (Annual Percentage Rate) for your balance to be 13.5%. 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 _ 0.135 AA =? 0.01125 2 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 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 $1900.00 $21.38 $25.00 $1896.38 $1896.38 2. F 1) 2 S 90 28 00 0 00 25100 What is the total amount that has been paid to the credit card company at the end of the first year? 2BX 122 300 How much of the original balance has been paid off at the end of the first year? flic29 From looking at the new balances over the first year, how many years do you think it will take to pay off the $1900? (This is a guess so there is no wrong answer. Before going on to step 2, write down your best estimate.) py yearsne LSCGC HARSHER ‘Math 1050 Credit Card Debt Assignment Nar 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 Di 1-(1+2 P Using this formula, solve for M_to determine the number of months it will take to pay off the $1900 credit card debt ‘with minimum monthly payments of $25. Round the number of months to two decimal places. (Attach all work for this assignment tothe end) ID2, d mohths How long is this in years, rounded to the nearest tenth of a year? 92,4712 S44 years ‘What is the total amount paid to the credit card company, rounded to the nearest dollar? 25x IZ2,6 = $4315 3, How many months will be required to pay off the debt if you pay $50 each month? Round to two decimal places. 4196 ™ abs How long is this in years, rounded to the nearest tenth of a year? 49.96 /J2 = Hid yeats What is the total amount paid to the credit card company, rounded to the nearest dollar? 56x Wi 4=$oud3 ‘4, How many months will be required to pay off the debt if you pay $75 each month? Round to two decimal places. 24,99 Mohths How long is this in years, rounded to the nearest tenth of a year? WUWV/IZA 2G years What is the total amount paid to the credit card company, rounded to the nearest dollar? 7 XU494 =42 244wer Math 1050 Credit Card Debt Assignment Name Teac els | 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 nearestcent. 5 170,% What is the total amount paid to the credit card company, rounded to the nearest dollar? 170,15 X12 =$20H2 6. What is the best plan for paying off the $1900? Why? she ith md Poh becance yor Pay the \eot anoint OF Aphey ‘What is the worst plan? Why? the dthyrsn Payaeh} flan I+ +obos over 10 Yeats Ghd coss5 over f4000 What should you do if you cannot afford to make the payments required by the best plan? Serte for G ln lowhk fay hey Plan, or Hey +0 Feanc8JO yancah, oF maybe Sel Spmerhihg 50 Yeu cah Make & IGF PaYath] ehd therengro F-oduco the abou oF 4140 FOr aut Plans, 7. What are two things that the average consumer can learn by completing this aon : | LH Q CGleniqre Payments ther bed work hen, whether His “heh tee oF Heir Hae tame f Schedne, A Ice HT or S0HSE OF esthalire wheh 14 Comes 10 Firthe © pegetere cold Purchases fh the Fite,Work w dy iw LLO.0125 2 Mook Hoy” Jou 52 pp 7 25-0) = Wico,)4s) - “4 9 1n5 Deth(),01ns)> WI ~ 235 4) 2 lois = 0. ee 41 “7 m= ‘Neoums) PZ 172, 61 mehths - Pr) 1 cite y= BE 7 |, ONS = 06 725 -M nC .a057= meas ‘oy = MRA ws 4.6 ne-2B) = 29,99 song th MT yrcrensg) _ 21,375 PZI76,1F = g,75625297