PAYING OFF CREDIT CARDS Simon recently received a credit card with an 15% nomina
ID: 2809742 • Letter: P
Question
PAYING OFF CREDIT CARDS Simon recently received a credit card with an 15% nominal interest rate. With the card, he purchased an Apple iPhone 5 for $400. The minimum payent on the card is only $10 per onth. a. If Simon makes the minimum monthly payment and makes no other charges, how many months will it be before he pays off the card? Do not round intermediate calculations. Round your answer to the nearest month. month(s) b. If Simon makes monthly payments of $30, how many months will it be before he pays off the debt? Do not round intermediate calculations. Round your answer to the nearest month. month(s) c. How much more in total payments will Simon make under the $10-a-month plan than under the $30-a-month plan. Do not round intermediate calculations. Round your answer to the nearest cent.Explanation / Answer
a. PV = 400, FV = 0, rate = 15%/12, PMT = -10
use nper funciton in Excel
number of months = 55.7976 months = 56
b. replace PMT with -30 and calculate nper
number of months = 14.6767 months = 15
c. difference = 55.7976*10 - 14.6767*30 = 117.68
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