Suppose Olivia has $6,660 in credit card debt on the VB credit card which has annual interest rate of 18.2%. Olivia is considering transferring her debt to the LA credit card that offers 0% interest for 18 months. (a) If Olivia makes a payment of $370 per month on the VB credit card, what will her balance be at the end of 18 months? Assume that no additional charges are made to the card. (Suggestion: You are trying to find the future value of a debt that has a present value of $6,660. Use the formula for the future value of an ordinary annuity. Round your answer to the nearest cent.) $ (b) If Olivia makes a payment of $370 per month on the LA credit card, what will her balance be at the end of 18 months? Assume that no additional charges are made to the card. (Suggestion: None of the payment goes to interest on the debt. Round your answer to the nearest cent.) $ (c) How much lower is the balance due after 18 months on the LA credit card? Note: Some credit card companies may charge a transfer fee which will affect the benefit of a 0% introductory rate. Assume that there is not a transfer fee. (Round your answer to the nearest cent.)
Suppose Olivia has $6,660 in credit card debt on the VB credit card which has annual interest rate of 18.2%. Olivia is considering transferring her debt to the LA credit card that offers 0% interest for 18 months. (a) If Olivia makes a payment of $370 per month on the VB credit card, what will her balance be at the end of 18 months? Assume that no additional charges are made to the card. (Suggestion: You are trying to find the future value of a debt that has a present value of $6,660. Use the formula for the future value of an ordinary annuity. Round your answer to the nearest cent.) $ (b) If Olivia makes a payment of $370 per month on the LA credit card, what will her balance be at the end of 18 months? Assume that no additional charges are made to the card. (Suggestion: None of the payment goes to interest on the debt. Round your answer to the nearest cent.) $ (c) How much lower is the balance due after 18 months on the LA credit card? Note: Some credit card companies may charge a transfer fee which will affect the benefit of a 0% introductory rate. Assume that there is not a transfer fee. (Round your answer to the nearest cent.)
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
Suppose Olivia has $6,660 in credit card debt on the VB credit card which has annual interest rate of 18.2%. Olivia is considering transferring her debt to the LA credit card that offers 0% interest for 18 months.
(a)
If Olivia makes a payment of $370 per month on the VB credit card, what will her balance be at the end of 18 months? Assume that no additional charges are made to the card. (Suggestion: You are trying to find the future value of a debt that has a present value of $6,660. Use the formula for the future value of an ordinary annuity. Round your answer to the nearest cent.)
$
(b)
If Olivia makes a payment of $370 per month on the LA credit card, what will her balance be at the end of 18 months? Assume that no additional charges are made to the card. (Suggestion: None of the payment goes to interest on the debt. Round your answer to the nearest cent.)
$
(c)
How much lower is the balance due after 18 months on the LA credit card? Note: Some credit card companies may charge a transfer fee which will affect the benefit of a 0% introductory rate. Assume that there is not a transfer fee. (Round your answer to the nearest cent.)
$
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