You owe $1,200 on your code card. The annual percentage rale (APR) is 12%, compo
ID: 1155732 • Letter: Y
Question
You owe $1,200 on your code card. The annual percentage rale (APR) is 12%, compounded merNy The godtardcor any ndeles tut your "ir rnum morty pemet itt, a. If you mako only he mrmum mortey payment, how lng we it takefor you to repay to $1,200 balace (maan rg no more harges on theemd·ard n moder b. If you make a payment of $26.09 each montei, how long will t take to repay the $1,200 belanoe? G. Compare the ?tal nterest paid i, part (a) with he total interest paid in Part (b) It will take months for you to repay the iniial balance (Round to the nearest whle umber) b. it will tikte months for you to repay the initial betlance (lound to the nearest whole number) e. The difference in the total internest paid in Part(a) and Part (0) is(Round to the nearest dola)Explanation / Answer
The formula being used,
Monthly payment = (r+(r/(1+r)^n-1))*principal amount
a.
17.09 = 0.01+(0.01/((1+0.01)^n)-1))*1200
0.014-0.01 = 0.01/(1.01)^n)-1)
0.004 *(1.01)^n)-1) = 0.01
(1.01)^n)-1) = 0.01/0.004 =2.5
1.01^n = 3.5
n = 126
b. 26.09 = 0.01+(0.01/((1+0.01)^n)-1))*1200
0.022-0.01 = 0.01/(1.01)^n)-1)
0.012*(1.01)^n)-1)=0.01
(1.01)^n)-1)=0.01/0.012=0.833
1.01^n = 1.833
n = 61
c. the difference in interest = 953.34-391.49 = 561.85
EMI
Total Payed
Principal
Interest
a
17.09
2153.34
1200
953.34
b
26.09
1591.49
1200
391.49
EMI
Total Payed
Principal
Interest
a
17.09
2153.34
1200
953.34
b
26.09
1591.49
1200
391.49
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