given that credit card balance is 12932 and the APR is 15.12% solve the followin
ID: 2793936 • Letter: G
Question
given that credit card balance is 12932 and the APR is 15.12% solve the following questions:
1- Compute your Daily Periodic Interest Rate (D). Give your answer as a percent.
2- Compute the amount of interest you will be charged over a billing period of 30 days.
4-Compare the minimum payment amount with the total interest charged over 30 days. How much of your minimum payment is going towards the interest? How much is being applied to the balance?
5-Using a platform of your choice, determine how many years will it take you to pay off your credit card balance if you make only the minimum payment each month.
6-If you only pay the minimum payment each month, how much total interest will you be charged over the life of the loan?
7-You decide you want to pay the credit card balance off in 5 years. How much should your monthly payments be? This will be your proposed payment.
Explanation / Answer
1. Daily Periodidc Interest Rate is calculated as APR% divided by number of days in a year (i.e.) 365. So, DPR = 15.12% / 365 = 0.041%.
2. Amount of interest charged for a 30 day billing period would be,
Outstanding balance x DPR x No. of days in billing cycle = 12,392 x 0.041% x 30 = $160.71
4. Since minimum payment is not given, I have assumed tht minimum payment would 3% of outstanding balance or $100 whichever is higher.
So, minimum payment amount = 12,392 x 3% = $388
Out of this, Amount paid towards interest = $160
Amount paid towards reducing balance = $387 - $160 = $227
5. Based on the calulation in the table given below, it will take 10years to pay off the credit card balance if we make only minimum payments each month and no new credit is taken.
6. If we pay only minimum payments throughout the year, total interest paid would be = $7,785 (sum of interest charged column in above table)
7. If we want to pay off the balance in 5 years,
Monthly minumum payments = (P * R/12) * [ (1+R/12)^N] / [ (1+R/12)^N-1], where
P = Principal (loan amount);
R = Annual Interest Rate;
N = No. of Monthly Instalments
we get, Monthly payment as $307.
Month Starting balance Minimum payment @ 3% Interest Charges Balance reduction Ending balance 1 12,932 388 161 227 12,705 2 12,705 381 158 223 12,481 3 12,481 374 155 219 12,262 4 12,262 368 152 215 12,047 5 12,047 361 150 212 11,835 6 11,835 355 147 208 11,627 7 11,627 349 144 204 11,423 8 11,423 343 142 201 11,222 9 11,222 337 139 197 11,025 10 11,025 331 137 194 10,831 11 10,831 325 135 190 10,641 12 10,641 319 132 187 10,454 13 10,454 314 130 184 10,270 14 10,270 308 128 180 10,090 15 10,090 303 125 177 9,912 16 9,912 297 123 174 9,738 17 9,738 292 121 171 9,567 18 9,567 287 119 168 9,399 19 9,399 282 117 165 9,234 20 9,234 277 115 162 9,071 21 9,071 272 113 159 8,912 22 8,912 267 111 157 8,755 23 8,755 263 109 154 8,602 24 8,602 258 107 151 8,450 25 8,450 254 105 148 8,302 26 8,302 249 103 146 8,156 27 8,156 245 101 143 8,013 28 8,013 240 100 141 7,872 29 7,872 236 98 138 7,734 30 7,734 232 96 136 7,598 31 7,598 228 94 134 7,464 32 7,464 224 93 131 7,333 33 7,333 220 91 129 7,204 34 7,204 216 90 127 7,078 35 7,078 212 88 124 6,953 36 6,953 209 86 122 6,831 37 6,831 205 85 120 6,711 38 6,711 201 83 118 6,593 39 6,593 198 82 116 6,477 40 6,477 194 80 114 6,363 41 6,363 191 79 112 6,252 42 6,252 188 78 110 6,142 43 6,142 184 76 108 6,034 44 6,034 181 75 106 5,928 45 5,928 178 74 104 5,824 46 5,824 175 72 102 5,721 47 5,721 172 71 101 5,621 48 5,621 169 70 99 5,522 49 5,522 166 69 97 5,425 50 5,425 163 67 95 5,330 51 5,330 160 66 94 5,236 52 5,236 157 65 92 5,144 53 5,144 154 64 90 5,053 54 5,053 152 63 89 4,965 55 4,965 149 62 87 4,877 56 4,877 146 61 86 4,792 57 4,792 144 60 84 4,708 58 4,708 141 59 83 4,625 59 4,625 139 57 81 4,544 60 4,544 136 56 80 4,464 61 4,464 134 55 78 4,385 62 4,385 132 54 77 4,308 63 4,308 129 54 76 4,232 64 4,232 127 53 74 4,158 65 4,158 125 52 73 4,085 66 4,085 123 51 72 4,013 67 4,013 120 50 71 3,943 68 3,943 118 49 69 3,873 69 3,873 116 48 68 3,805 70 3,805 114 47 67 3,739 71 3,739 112 46 66 3,673 72 3,673 110 46 65 3,608 73 3,608 108 45 63 3,545 74 3,545 106 44 62 3,483 75 3,483 104 43 61 3,421 76 3,421 103 43 60 3,361 77 3,361 101 42 59 3,302 78 3,302 100 41 59 3,243 79 3,243 100 40 60 3,184 80 3,184 100 40 60 3,123 81 3,123 100 39 61 3,062 82 3,062 100 38 62 3,000 83 3,000 100 37 63 2,937 84 2,937 100 37 63 2,874 85 2,874 100 36 64 2,809 86 2,809 100 35 65 2,744 87 2,744 100 34 66 2,678 88 2,678 100 33 67 2,612 89 2,612 100 32 68 2,544 90 2,544 100 32 68 2,476 91 2,476 100 31 69 2,407 92 2,407 100 30 70 2,337 93 2,337 100 29 71 2,266 94 2,266 100 28 72 2,194 95 2,194 100 27 73 2,121 96 2,121 100 26 74 2,047 97 2,047 100 25 75 1,973 98 1,973 100 25 75 1,897 99 1,897 100 24 76 1,821 100 1,821 100 23 77 1,743 101 1,743 100 22 78 1,665 102 1,665 100 21 79 1,586 103 1,586 100 20 80 1,506 104 1,506 100 19 81 1,424 105 1,424 100 18 82 1,342 106 1,342 100 17 83 1,259 107 1,259 100 16 84 1,174 108 1,174 100 15 85 1,089 109 1,089 100 14 86 1,002 110 1,002 100 12 88 915 111 915 100 11 89 826 112 826 100 10 90 737 113 737 100 9 91 646 114 646 100 8 92 554 115 554 100 7 93 461 116 461 100 6 94 366 117 366 100 5 95 271 118 271 100 3 97 174 119 174 100 2 98 76 120 76 77 1 76 -Related Questions
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