8) Credit Card Payment. On May 12, the billing date for your card, you have an o

Question

8) Credit Card Payment. On May 12, the billing date for your card, you have an outstanding balance of $378.50. For the period ending June 12, you had the following transactions: May 13, $129.79 Purchase May 15, $50 Payment . June 1, $135.85 Purchase . June 8, $37.63 Purchase Find the average daily balance for the period, the finance charge on June 12, at an interest rate of 1.3% per month, and the balance due on June 12 9) Buying a Home. You purchase a home selling for $215,000. You make a 20% down payment and obtain a mortgage for the rest at 4.5% over 25 years. What is the principal for the mortgage and what is the monthly payment? 10) Research 3 credit cards, telling me the interest rates, penalties, rewards, and fees. Then tell me which one you would pick and why.

Explanation / Answer

9)

Principal for mortgage

= Price x (1 – Down payment percentage)

= $215,000 x (1 – 0.20)

= $215,000 x 0.80

= $172,000

Now, Monthly payment is given by the following formula

Monthly payment

= [P x R x (1 + R) ^ n] / [(1 + R) ^ n – 1]

Where,

P = Principal = $172,000

R = Monthly rate of interest = Yearly rate / 12

= 4.5 / 12

= 0.375%

n = Number of months in EMI

= Number of years x 12

= 25 x 12

= 300

So, EMI

= [$172,000 x 0.375% x (1.00375) ^ 300] / [(1.00375 ^ 300 – 1]

= $645 x 3.073742 / [3.073742 – 1]

= $956.03 per month

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