‘Math 1050 Credit Card Debt Project ce Name_ OWA) Cog You have received your monthiy credit card statement and must now deal with the financial realities of last month's birthday celebration. While your milestone in years was deserving of a celebration, dealing with the $2000 in credit card charges will require some planning. Your credit card statement lists the APR (Annual Percentage Rate) for your balance to be 14.5%, This is the yearly interest rate the credit card company uses in calculating interest due on your balance. The credit card company compounds interest monthly, Your monthly interest rate on credit card charges will be: APR _ 0.14! APR 8-145 9.012083 m2 ‘The minimum payment required by your credit card company is $25/month. Assuming that you do not make any new charges to your account, answer the following questions to help you determine the best plan for paying off this credit card debt. 1. To begin with, let's check out the plan of only paying the minimum amount due each month. To get a feel for how this will affect the balance, finish filling in the following table using the minimum monthly payment of $25. X 020% d= ‘Month ‘Old Balance Interest Payment ‘New Balance 1 $2000.00 $24.17 $25.00 $1999.17 2 $1999.17 $i4. 10 29. 04 199.3% a Te $24.15 2550 1447.4 as g 4 2+ 25 $4 4ig, 02 Sad 24.1 Ze 1145.15 5} 4 324.11 Gabe 1a, Qo zag $24.10 a $1943.40 a [4 § 24, oF 29.090 ¥ 1743.06 9 a. $24.08 Ze $ 1442-13 10.) $24.07 an § 144\ .20 a1 4 $24.00 B . $ [440.26 af $ $2205 25. $1404.31 What is the total amount that has been paid to the credit card company at the end of the first year? 4 B00 How much of the original balance has been paid off at the end of the first year? $ 10-04 -37 968.2) From looking at the new balances over the first year, how many years do you think it will take to pay off the $2000? (This is @ guess so there is no wrong answer. Before going on to step 2, write down your best estimate.) Oo