The McCloud family is purchasing a new refrigerator. The price is $2000. They are charging the purchase to the store credit card, and are making the minimum payment of 3% of the balance. The company tells them that when making the minimum monthly payment, 80% of the minimum payment goes toward interest and the remaining portion of the minimum payment goes toward the principal. 1. Calculate the monthly payment details for the first 6 months of minimum payments. Number of Months (n) 1 2 3 4 5 6 Balance Before Monthly Payment ($) Minimum Monthly Payment ($) Amount Paid Toward Principal ($) Amount Paid Toward Interest ($) Balance After Monthly Payment ($) 2. After 3 years, what is the remaining balance? Show your work. 3. What changes would you recommend the McCloud's make to their payment plan? Explain your reasoning.
The McCloud family is purchasing a new refrigerator. The price is $2000. They are charging the purchase to the store credit card, and are making the minimum payment of 3% of the balance. The company tells them that when making the minimum monthly payment, 80% of the minimum payment goes toward interest and the remaining portion of the minimum payment goes toward the principal. 1. Calculate the monthly payment details for the first 6 months of minimum payments. Number of Months (n) 1 2 3 4 5 6 Balance Before Monthly Payment ($) Minimum Monthly Payment ($) Amount Paid Toward Principal ($) Amount Paid Toward Interest ($) Balance After Monthly Payment ($) 2. After 3 years, what is the remaining balance? Show your work. 3. What changes would you recommend the McCloud's make to their payment plan? Explain your reasoning.
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:Unit Activity
Sequences and Series
Applications
It's All About the Interest
The McCloud family is purchasing a new refrigerator. The price is $2000. They are charging the
purchase to the store credit card, and are making the minimum payment of 3% of the balance.
The company tells them that when making the minimum monthly payment, 80% of the minimum
payment goes toward interest and the remaining portion of the minimum payment goes toward
the principal.
1. Calculate the monthly payment details for the first 6 months of minimum payments.
Number of
Months (n)
1
2
3
4
of Growth Modeling:
5
6
Balance
Before
Monthly
Payment ($)
Minimum
Monthly
Payment ($)
Amount Paid
Toward
Principal ($)
Amount Paid
Toward
Interest ($)
Balance After
Monthly
Payment ($)
2. After 3 years, what is the remaining balance? Show your work.
3. What changes would you recommend the McCloud's make to their payment plan? Explain
your reasoning.
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