JONES ‘You have received your monthly crecit 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 calebration, dealing with the $2000 in credit card charges will require some planning Math 1050 Credit Card Debt Project Your credit card statement lists the APR (Annual Percentage Rate) for your balance to be 14.5%. Thisis 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 Sp sa 0.012088 The imum payment required by your eredit card company is $25/month. Assuming that you de not meke 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 x $2000.00 $28.17 $25.00 $1999.17 2 $1989.17 24. 1b 1978. 32 3 1410.33 24.16 199 7.4¢ = 14 24.14 1945. 62 S [ag 24-12 6 pas i - 7 L 1-1 z 24 - 16 s DA. OF 10 24.0% i 24 6 wz 24 -0b 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 at the end of the first year? 2060 - 1989.21 = ¥ |o.e4 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.) AbOUt 20+ ypc af SrMath 1050 Credit Card Debt Project 2. A formula for calculating the payment, P, required to pay offa debt of amount Din Mf months with monthly interest rate / is Di (iy Using this formula, solve for M to determine the number of months it will take to pay off the $2000 crecit card debt with rinimam monthly payments of $25. Round the number of months to two decal places. (Attachall work for this assent 1 the end) 25 1.04 n= (2000)(0.91208'> | ee 000 (0.012993) mn mpn(! 5 tn =P nfescoro.9)06 Howlorgisthic in ears rounded tothencoresttenthotayear? J! I unr(0.012033) 23-6 bac What is the total amount paid to the credit card company, rounded to the nearest dollar? ay 1.018 3. How many months will be required fo pay off the debt f you pay $50 each month? Round to two decimal places 2000)( 0.91208 On (CE Mm = = dW 4.78 menths = — On (1.012082, How long is this in years, rounded to the nearest tenth of ¢ year? 4.6 weak: What is the total amount peid to the credit card company, rounded to the nearest dollar? 4. How many months will be Fe as ite bay ot feutes pay $75 each month? Round to two decimal places. Qn (2a 900 J ‘tn (1.012082) How long is this in years, rounded to oe ie ster oF a ‘year? m = 32.38 mnths 1247Math 1050 Credit Card Debt Project 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. . ‘What is the total amount paid to the credit card company, rounded to the nearest dollar? (190.05) 12) 2,161 6. What is the best plan for paying off the $2000? Why? paying. oF In Bo menths costs ne Peart amount of manogr What is the worst plan? Why? es paying 26.00 eur menth costs Tho MIG What should you do if you cannot afford to make the payments required by the best plan? Pay, OS Much A you can atftoyd aly a noe. 2. ar two things tat he average consumer can ear by competing tis assignment? “That using» tho minimum ameunl required 49 pay. ic actually, net the best Che oe. , * payof me Credit Card debt mat cofbects intrest af SOON as pastlble +0 save monoy,.