Simon recently received a credit card with an 19% nominal interest rate. With th

Question

Simon recently received a credit card with an 19% nominal interest rate. With the card, he purchased an Apple iPhone 5 for $410. The minimum payment on the card is only $10 per month. 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. 66.68 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 15.52 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. $51.15 Hide Feedback Incorrect Check My Work (i remaining)

Explanation / Answer

a) PMT = PV of loan / 1 - ( 1+interest rate)-n / interest rate

$ 10 = $ 410 / 1 - [ (1+(0.19/12))-n ] / (0.19/12)

Solving for n

n = 67 months

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b) $ 30 = $ 410 / 1 - [ (1+(0.19/12))-n ] / (0.19/12)

n = 16 months

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C) Total payment in $ 10 a month plan = $ 666.7671

Total payment in $ 30 a month plan = $ 465.6653

More in total payments = $ 666.7671 -  $ 465.6653

More in total payments = $ 201.10

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