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Question

Click here to read the eBook: Future Values Clilck here to read the eBook: Semiannual and Other Compounding Periods PAYING OFF CREDIT CARDS Simon recently received a credR d weh an 10% nominal interest rate, with the card, he purchased an Apple iPhone 5 for $340. The minimum, payment on the ard is only $20 per month. a. "Si en makes the minimum monthly payment and makes ro other charges, how many months wi it be betre he Days om the card? Do not round inter ediate cai iations Round yor answer to the nearest monen month(s) . Ir Simon makes monthly payments of $60, how many months wil it be before he pays off the debt? De not round intermediate calulations Round your answer to the nearest month month(s) c. How much more in total payments will Simon make under the $20-a-month plan than under the $60-a-month plan. Do not round intermediate caloulations. Round your answer to the nearest cent

Explanation / Answer

1-

Time to repay the loan in months -Using Nper function in MS excel

nper(rate,pmt,pv,fv,type) rate =16/2 = 1.33% PMT = -20 PV = 340 FV = 0 type =0

NPER(1.33%,-20,340,0,0)

19.3995

19

time to attain the future value

19

2-

Time to repay the loan in months -Using Nper function in MS excel

nper(rate,pmt,pv,fv,type) rate =16/2 = 1.33% PMT = -60 PV = 340 FV = 0 type =0

NPER(1.33%,-60,340,0,0)

5.930673

6

time to attain the future value in months

6

3-

Excess amount to be paid if 20 per month option is choosen

(20*19)-(60*6)

20

1-

Time to repay the loan in months -Using Nper function in MS excel

nper(rate,pmt,pv,fv,type) rate =16/2 = 1.33% PMT = -20 PV = 340 FV = 0 type =0

NPER(1.33%,-20,340,0,0)

19.3995

19

time to attain the future value

19

2-

Time to repay the loan in months -Using Nper function in MS excel

nper(rate,pmt,pv,fv,type) rate =16/2 = 1.33% PMT = -60 PV = 340 FV = 0 type =0

NPER(1.33%,-60,340,0,0)

5.930673

6

time to attain the future value in months

6

3-

Excess amount to be paid if 20 per month option is choosen

(20*19)-(60*6)

20

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