Paying off a Discover card. Assume that you have a balance of $3000 on your Discover credit card and that you make no more charges. Assume that Discover charges 21% APR and that each month you make only the minimum payment of 2% of the balance. a. Find a formula for the remaining balance after t monthly payments. b. On what balance do you begin making payments of $50 or less? c. Find how many months it will take to bring the remaining balance down to the value from part b.

Paying off a Discover card. Assume that you have a balance of $3000 on your Discover credit card and that you make no more charges. Assume that Discover charges 21% APR and that each month you make only the minimum payment of 2% of the balance. a. Find a formula for the remaining balance after t monthly payments. b. On what balance do you begin making payments of $50 or less? c. Find how many months it will take to bring the remaining balance down to the value from part b.

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

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You have a credit card that has a balance of $8930 at an APR of 16.49%. You plan to pay $400 each month in an effort to clear the debt quickly. How many months will it take you to pay off the balance?
Assume you have a credit card that has a 24% APR and you have an average daily balance of $1,500.00. Assume there are 12 equal monthly billing cycles on the credit card. Respond to the following two (2) questions: (a) what is the approximate finance charge that you would owe for one month, assuming you did not repay any principal? (b) What is the approximate finance charge that you would owe for one year, assuming you did not repay any principal?
You expect to have the given amount in an account with the given terms. Find how much you can withdraw periodically in order to make the account last the specified amount of time. Round your answer to the nearest cent. Account balance: $700,000 Interest rate: 4.65% monthly 17 years Frequency Time: Periodic Withdraw: $
COMPARING INTEREST COST. You currently have a credit card that charges 18.99% interest. You receive an offer for a new credit card with a teaser rate of 9.99% for the first 6 month...after that the rate goes up to 24.99%. 14a) What is the total annual interest on the current credit card? 14b) What will be the interest in the first year after you switch? 14C) Should you switch? why?
2. Say you purchase a computer for $1300 at 7% interest and want to have it paid off in 48 months. Use the simple interest formula. a) Calculate the monthly payment necessary to pay off the principal and the interest. b) Calculate the APR. Write out the formula first to show your work.
Suppose you deposit m dollars the beginning of every month in a savings account that earns a monthly interest rate of r. For an initial investment of m dollars, the amount of money in your account at the beginning of the second month is the sum of your second deposit and your initial deposit plus interest. Denote by An the amount of money in your account in the nth month. 1. Explain why A₁ = m dollars. 2. Explain why A₂ = m+m(1+r) dollars. 3. Write down explicit expressions for A3 and A4. This is the crucial step. 4. Explain why An = m+m(1 + r) + m(1 + r)² + ... +m(1 + r)"−¹ dollars. 5. Use the formula for a geometric sum to show that An = m (1 + r)” − 1 r dollars. 6. If your account has a monthly interest rate r = 0.002 and you deposit $200 monthly for 5 years, how much money will you have in your account after the 5 years? (Hint: How many months?)
Question 7. You have an outstanding credit card balance of $2,000. You decide to stop making new charges and pay $375 each month until the balance is paid. If your annual interest rate is 18%, how many months will it take you to pay off your balance? Your Answer: Answer
Assume you have a balance of $1000 on a credit card with an APR of 24%, or 2% per month. You start making monthly payments of $200, but at the same time you charge an additional $90 per month to the credit card. Assume that interest for a given month is based on the balance for the previous month. The following table shows how you can calculate your monthly balance. Complete and extend t the debt is paid off. How long does it take to pay off the credit card debt?
Suppose you deposit $3600 to open an account that earns 6% interest compounded monthly. You are trying to save money and find that you are able to put away an additional $50 each month. Write a recursive formula to show the amount of money you will have in the account at the end of each month.
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