Suppose you have a balance of B dollars on a credit card. You choose to stop charging and pay off the card, making only minimum monthly payments. If your card charges an APR of r, as a decimal, and requires a minimum monthly payment of 5% of the balance, then the time T, in months, required to reduce your balance to $100 is given by T = 2 - log(B) / log(0.95(1+r/12)). Suppose your current balance is $8000. (a) How long will it take to reduce your balance to $100 if the APR for your card is 25%? Report your answer to the nearest whole month. ______ months (b) Plot the graph of T versus r. Use a horizontal span of 0 to 0.3. (c) Does a larger APR mean a longer or a shorter time to reduce the balance to $100?
Suppose you have a balance of B dollars on a credit card. You choose to stop charging and pay off the card, making only minimum monthly payments. If your card charges an APR of r, as a decimal, and requires a minimum monthly payment of 5% of the balance, then the time T, in months, required to reduce your balance to $100 is given by T = 2 - log(B) / log(0.95(1+r/12)). Suppose your current balance is $8000. (a) How long will it take to reduce your balance to $100 if the APR for your card is 25%? Report your answer to the nearest whole month. ______ months (b) Plot the graph of T versus r. Use a horizontal span of 0 to 0.3. (c) Does a larger APR mean a longer or a shorter time to reduce the balance to $100?
Advanced Engineering Mathematics
10th Edition
ISBN:9780470458365
Author:Erwin Kreyszig
Publisher:Erwin Kreyszig
Chapter2: Second-order Linear Odes
Section: Chapter Questions
Problem 1RQ
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Suppose you have a balance of B dollars on a credit card. You choose to stop charging and pay off the card, making only minimum monthly payments. If your card charges an APR of r, as a decimal, and requires a minimum monthly payment of 5% of the balance, then the time T, in months, required to reduce your balance to $100 is given by
T = 2 - log(B) / log(0.95(1+r/12)).
Suppose your current balance is $8000.
(a) How long will it take to reduce your balance to $100 if the APR for your card is 25%? Report your answer to the nearest whole month.
______ months
(b) Plot the graph of T versus r. Use a horizontal span of 0 to 0.3.
(c) Does a larger APR mean a longer or a shorter time to reduce the balance to $100?
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