Many college students have Visa credit cards that carry an interest rate of %u20

Question

Many college students have Visa credit cards that carry an interest rate of %u201Csimple 24% per year%u201D (that is, 2% per month). When the balance on such a card is $5000, the minimum payment is $110.25.

(a.) What is the amount of interest in the first payment?

(b.) How long will it take, in months, to pay off the balance, if the cardholder continues to make payments of $110.25 per month and adds no other charges to the card?

Provide a cash flow chart if possible.

Page(s): 120, Engineering Economy by Leland Blank and Anthony Tarquin, McGraw-Hill Higher Education

NOOK Study (Chris Diaz, chris7671@gmail.com). This material is protected by copyright.

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