41052, 1:02 AM Lumen OFM Warr You must answer all of the questions in order for the lab to function properly. You can submit answers one at a time (or multiple at a time) so that you can make sure itis correct before proceeding to the next. It is a good idea to also keep a written account of the given values (e.g. original balance, annual interest rate, etc.) as you will be asked to refer back to these values as you go. Once you have "submitted" an answer to a question, you can click back and forth between the parts if you need to, though you may need to click on "Reattempt this question" at the top of the page. Don't worry, your correct answers will be saved! Round all of your answers to the nearest cent when appropriate to do so. Some questions are programmed to allow for slight variations in the answers due to rounding errors, BUT it is important that you don't round values you are using in formulas. Only round your final answers. In this lab, you will be computing various values associated with paying off a balance on a credit card. Imagine the following scenario: You have received your monthly credit card statement and must now deal with the financial realities of last month's birthday celebration. While your birthday was deserving of a celebration, dealing with the $1950 in credit card charges will require some planning. Your credit card statement lists the APR (Annual Percentage Rate) for your balance to be 13.4 % . This is the yearly interest rate the credit card company uses in calculating interest due on your balance. Express the APR as a decimal: The credit card company compounds interest monthly. Your monthly interest rate on credit card charges will be: (Round your monthly interest rate to 5 decimal places) a i= APR _ (oom The minimum payment required by your credit card company is $25 per month. Assuming that you do not make any new charges to your account, you will answer the following questions to help you determine the best plan for paying off this credit card debt. a) To begin with, let's check out the pian of only paying the minimum amount due each hitpssohm lumenlearning.convassoss2/%eide694446aid=43150554t/print 29rosa, 1402 AM Lumen OFM month. To get a feel for how this will affect the balance, you'll compute the interest and the balance on the first few months assuming a the minimum monthly payment of $25. Let By represent the balance for the k** month and Jy represent the interest charged for the Kk‘ month. For example, Ii is the interest charged on the original balance and By is the original balance plus 1 minus the $25 payment (said differently, By is the balance after one month). Start by finding those values. For this exercise, round all values to the nearest cent (2 decimal places). (Hint: Jy = i - Bea) ty = $21.78 By = §| 1946.78 Now use B; to find the interest charged for the 2"4 month which is Jp, and the balance after 2 months, which is By (don't forget to subtract the $25 payment). dy = $21.75 By = §) 1943.53 Got it? Ok, you're ready to figure out how much interest you will be charged for the rest of the year and what your final balance will be after 12 months of just making the minimum, payment. Finish filling in the following "table". hasan) B= Soon) nasa) B= ome] hasne) B=deow _] cc ee Cc hasae ) B=suon | hasne ) B= oun] n= Sau) Bu=Sioee | n=) Ba= Sone | n= uo) Ba = Some] b) How much of the original balance has been paid off at the end of the first year? Answer: $| 41.09 ©) What is the total amount that has been paid to the credit card company at the end of the first year? (this is just your minimum payment per month times 12 months.) hitpssohm lumenlearning.convassoss2/%eide694446aid=43150554t/print 384728122, 11.02. AM Lumen OHM Answer: ) What percentage of what you paid went to paying the interest? Express your answer asa percentage and round it to one decimal place. Answer: % Y Question 2 Garepts O99 hitpssohm lumenlearning.convassoss2/%eide694446aid=43150554t/print 494728122, 11.02. AM Lumen OHM Warning! You must answer all of the questions in order for the lab to function properly. You can submit answers one at a time (or multiple at a time) so that you can make sure it is correct before proceeding to the next. Part IT A formula for calculating the payment, P , required to pay off a debt of amount D in M months with monthly interest rate i is D- M pa? _ 1-(1+4) a) Using this formula, solve for M. Use either the Common log, log, or the Natural log, In. Starting with “M=", enter the whole formula: If you need to, look back to Question 1 to recall the debt amount. b) Determine the number of months it will take to pay off the credit card debt with minimum monthly payments of $25. You'll need the monthly interest rate from Part I: i = 0.01117. Round the number of months to two decimal places. ©) How long is this in years, rounded to the nearest tenth of a year? 4) What is the total amount paid to the credit card company, rounded to the nearest dollar? (Hint: Multiply the payment amount with your answer to part b)) hitpssohm lumenlearning.convassoss2/%eide694446aid=43150554t/print 59425722, 1:02 AM Lumen OHM ‘Total Amount:$} 4625 €) How much of the total paid goes toward interest? Interest:$ 2675 Y Question 3 & 4/4 pts 0 97-99 Warning! You must answer all of the questions in order for the lab to function properly. You can submit answers one at a time (or multiple at a time) so that you can make sure itis correct before proceeding to the next. Part II Using the formula for M from question 2, answer the following questions: a) Determine the number of months it will take to pay off the $1950 credit card debt with a monthly payment of $50. Round the number of months to two decimal places. b) How longs 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? (Hint: Multiply the payment amount with your answer to part a)) d) How much of the total paid goes toward interest? Interest: $ 625 Y Question 4 Garapts O99 hitpssohm lumenlearning.convassoss2/%eide694446aid=43150554t/print 6941052, 1:02 AM Lumen OFM Warning! You must answer all of the questions in order for the lab to function properly. You can submit answers one at a time (or multiple at a time) so that you can make sure it is correct before proceeding to the next. Part IV Using the formula for M from question 2, answer the following questions: a) Determine the number of months it will take to pay off the $1950 credit card debt with a monthly payment of $75. Round the number of months to two decimal places. Number of months: | 30.89 b) 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? (Hint: Multiply the payment amount with your answer to part a)) d) How much of the total paid goes toward interest? Interest: $ 366.75 Y Question 5 3/3 pts 0 99 hitpssohm lumenlearning.convassoss2/%eide694446aid=43150554t/print41052, 1:02 AM Lumen OFM Warning! You must answer all of the questions in order for the lab to function properly. You can submit answers one at a time (or multiple at a time) so that you can make sure itis correct before proceeding to the next. Part V a) Using the formula for calculating the payment, P, determine how large of a payment is required to pay off a debt in 12 months. Use the same monthly interest rate i = 0.01117 and the same debt amount $1950 from the first question. The formula you need is: b) What is the total amount paid to the credit card company? (Hint: Multiply the payment amount by 12). ©) How much of the total paid goes toward interest? Interest: $ 144.48 Y Question 6 B22pts 099 hitpssohm lumenlearning.convassoss2/%eide694446aid=43150554t/print4728122, 11.02. AM Lumen OHM This needs to be a separate page that is typed, proof-read for typos, spelling, and grammar. Your writing should be in an essay form (written in paragraphs). Use 12-point font and double space, Add a title (e.g. Reflective Writing for Credit Card Lab). Provide a brief introduction explaining the lab in your own words. Also in the introduction, tell the audience which mathematical techniques you used in the lab (e.g. percentages, payment formulas, logarithms, etc.). Then, please respond to each of the questions. Do you think this project shows how math can be applied to the real world? If "yes", please elaborate-why are the results important or beneficial? If "no", how could the lab change to make it more applicable to the "real world"? Can you give an example of another application where this type of analysis would be beneficial? Be specific Ifyou were a financial adviser, why would it be important to be able to explain the details of this project to clients? Did this assignment change your opinion of the usefulness of math? Write one paragraph stating what ideas changed and why. If this project did not change the way you think, write how this project gave further evidence to support your existing opinion about applying math. Be specific. What is the best plan for paying off a credit card balance? What is the worst approach and why? What should you do if you can't afford the payments required for the best plan? What are two things that the "average" consumer can learn by completing this assignment? ePortfolio: Post a copy of this lab, including the Reflective Writing, to your ePortfolio (if you need to, scan a copy in the Copy Center). For more information about ePortfolios, please see the syllabus. lunderstand and will follow the directions. fine hitpssohm lumenlearning.convassoss2/%eide694446aid=43150554t/print 99