Suppose you owe $1,000 on your credit card. The annual percentage rate (APR) is 15%, compounded monthly. The credit card company says your minimum monthly payment is $16.57. a. If you make only this minimum payment, how long will it take for you to repay the $1,000 balance (assuming no more charges are made)? b. If you make the minimum payment plus $9.35 extra each month (for a total of $25.92), how long will it take to repay the $1,000 balance? c. Compare the total interest paid in Part (a) with the total interest paid in Part (b). a. It will take b. It will take months for you to repay the initial balance. (Round to the nearest whole number.) months for you to repay the initial balance. (Round to the nearest whole number.) c. The difference in the total interest paid in Part (a) and Part (b) is S (Round to the nearest dollar.)
Suppose you owe $1,000 on your credit card. The annual percentage rate (APR) is 15%, compounded monthly. The credit card company says your minimum monthly payment is $16.57. a. If you make only this minimum payment, how long will it take for you to repay the $1,000 balance (assuming no more charges are made)? b. If you make the minimum payment plus $9.35 extra each month (for a total of $25.92), how long will it take to repay the $1,000 balance? c. Compare the total interest paid in Part (a) with the total interest paid in Part (b). a. It will take b. It will take months for you to repay the initial balance. (Round to the nearest whole number.) months for you to repay the initial balance. (Round to the nearest whole number.) c. The difference in the total interest paid in Part (a) and Part (b) is S (Round to the nearest dollar.)
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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Transcribed Image Text:Suppose you owe $1,000 on your credit card. The annual percentage rate (APR) is 15%, compounded monthly. The credit card company says your minimum monthly payment is $16.57.
a. If you make only this minimum payment, how long will it take for you to repay the $1,000 balance (assuming no more charges are made)?
b. If you make the minimum payment plus $9.35 extra each month (for a total of $25.92), how long will it take to repay the $1,000 balance?
c. Compare the total interest paid in Part (a) with the total interest paid in Part (b).
a. It will take
b. It will take
c. The difference in the total interest paid in Part (a) and Part (b) is $
months for you to repay the initial balance. (Round to the nearest whole number.)
months for you to repay the initial balance. (Round to the nearest whole number.)
(Round to the nearest dollar.)
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