PROBLEM #1 Today (April 24, 2018) after having spent hours in the library doing
ID: 2530178 • Letter: P
Question
PROBLEM #1 Today (April 24, 2018) after having spent hours in the library doing your homework you decide that you need your own personal computer. The laptop you want is priced at $2,600.00 but all you have with you is $250.00 cash. Your only option now is to charge the remaining amount to your credit card. The credit card has an APR of 24.90% starting 6 months after the purchase date. You would be paying off the loan by giving S100.00 each month on the 1st starting in May 2018 A 8.25% sales tax will be applied to the $2,600. If you purchase the laptop today paying only the remaining amount using that credit card, how long wil t take you to pay off the loan? Assume That is the only payment you charge to the card No penalty fees are charged since you are very responsible and pay the $100 every month on time and you have sufficient founds so the payment does not go returned No annual fees Would you wait to purchase the laptop until you have saved enough or would you make the purchase using a credit card? Why or why not? (No wrong answer on this part)Explanation / Answer
The total Price of the Laptop is 2,600 + 8.25% = 2,814.5
The amount charged to the credit card = 2814.5 - 250 = 2564.5
For April 24th to Octoober 24th(6 months), No interest would apply. In this period the total payment would be 5X100 = $500(Starting 1st May)
Hence the outstanding balance as on Ocotber 24th = 2564.5 - 500 = 2,064.5
From October 24th to Oct 31st the interest charge is 6/360 X 2064.5 X 24.9% = 8.5
Hence the Outstanding Balance as on Nov 1st would be 2064.5 - 8.5 - 100 = 1956.05.
From this time the payments will be as per the following schedule:
At the present rate, the Company would pay back the loan on Dec 2020, which is 2 years and 8 Months from the date of purchase.
Opening Balance Interest Charge(Opening Balance X 24.9% X 30/360) Payment Closing Balance Nov-18 1,956.05 40.59 -100.00 1,896.64 Dec-18 1,896.64 39.36 -100.00 1,835.99 Jan-19 1,835.99 38.10 -100.00 1,774.09 Feb-19 1,774.09 36.81 -100.00 1,710.90 Mar-19 1,710.90 35.50 -100.00 1,646.40 Apr-19 1,646.40 34.16 -100.00 1,580.57 May-19 1,580.57 32.80 -100.00 1,513.36 Jun-19 1,513.36 31.40 -100.00 1,444.77 Jul-19 1,444.77 29.98 -100.00 1,374.74 Aug-19 1,374.74 28.53 -100.00 1,303.27 Sep-19 1,303.27 27.04 -100.00 1,230.31 Oct-19 1,230.31 25.53 -100.00 1,155.84 Nov-19 1,155.84 23.98 -100.00 1,079.83 Dec-19 1,079.83 22.41 -100.00 1,002.23 Jan-20 1,002.23 20.80 -100.00 923.03 Feb-20 923.03 19.15 -100.00 842.18 Mar-20 842.18 17.48 -100.00 759.66 Apr-20 759.66 15.76 -100.00 675.42 May-20 675.42 14.01 -100.00 589.43 Jun-20 589.43 12.23 -100.00 501.67 Jul-20 501.67 10.41 -100.00 412.07 Aug-20 412.07 8.55 -100.00 320.63 Sep-20 320.63 6.65 -100.00 227.28 Oct-20 227.28 4.72 -100.00 131.99 Nov-20 131.99 2.74 -100.00 34.73 Dec-20 34.73 0.72 -34.73 0.72
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