Card Name (APR %) Existing Balance Credit Limit Mark2 (6.5%) Bee4 (10.1%) $475.00 $1,311.48 Month Principal Interest accrued Payment (on due date) End-of-month balance You have $400.00 each month to payoff these 2 credit cards. You decide to pay only the interest on the lowest interest card and the remaining amount to the other card. Complete the following two tables to help you answer questions 1-3. Higher-Interest Card (Payoff Option) 678910 Month Principal Interest accrued Lower-Interest Card Payment (on due date) $3,000.00 $2,500.00 Savings vs. Debt Portfolio End-of-month balance 345678910 1) How long does it take to pay off the higher interest card? 2) What is the amount of the last payment? Why? 3) At the end of the month that you pay off the higher-interest card, after you have started to pay down your debt on the lower-interest card, what is the balance of the lower- interest card? Why?
Card Name (APR %) Existing Balance Credit Limit Mark2 (6.5%) Bee4 (10.1%) $475.00 $1,311.48 Month Principal Interest accrued Payment (on due date) End-of-month balance You have $400.00 each month to payoff these 2 credit cards. You decide to pay only the interest on the lowest interest card and the remaining amount to the other card. Complete the following two tables to help you answer questions 1-3. Higher-Interest Card (Payoff Option) 678910 Month Principal Interest accrued Lower-Interest Card Payment (on due date) $3,000.00 $2,500.00 Savings vs. Debt Portfolio End-of-month balance 345678910 1) How long does it take to pay off the higher interest card? 2) What is the amount of the last payment? Why? 3) At the end of the month that you pay off the higher-interest card, after you have started to pay down your debt on the lower-interest card, what is the balance of the lower- interest card? Why?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Transcribed Image Text:PEARSON
ALWAYS LEARNING
Card Name (APR %) Existing Balance Credit Limit
$3,000.00
$2,500.00
$475.00
Mark2 (6.5%)
Bee4 (10.1%)
$1,311.48
Savings vs. Debt Portfolio
You have $400.00 each month to payoff these 2 credit cards.
You decide to pay only the interest on the lowest interest card
and the remaining amount to the other card. Complete the
following two tables to help you answer questions 1-3.
Higher-Interest Card (Payoff Option)
12345678910
Month
Principal
Interest accrued
Payment (on due
date)
End-of-month
balance
Lower-Interest Card
l1234567891o
Month
Principal
Interest accrued
Payment (on due
date)
End-of-month
balance
1) How long does it take to pay off the higher interest card?
2) What is the amount of the last payment? Why?
3) At the end of the month that you pay off the higher-interest
card, after you have started to pay down your debt on the
lower-interest card, what is the balance of the lower-
interest card? Why?
Complete the following two tables to help you answer questions
4-5.
4) Rework the problem so that you pay off the lower-interest
card first.
s) How much money do you save by paying off the higher-
interest card first?
Lower-Interest Card (Payoff Option)
12345678910
Month
Principal
Interest accrued
Payment (on due
date)
End-of-month
balance
Higher-Interest Card
Month
Principal
Interest accrued
Payment (on due
date)
End-of-month
balance
T12345678910
Be sure to include in your response:
· All parts of the table are complete and calculations correct
· The answers to the additional questions
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