Consider the following credit card scenario and show the figures that would go i

Question

Consider the following credit card scenario and show the figures that would go in each column in the table below (similar to Problem #33 in 4D of your text): You start (Month 0) with a balance on the credit card of $789.56. Your APR is 17.5% consistently and you make in Month 1 you pay $120 on the card balance but have purchase charges of $45.69. In Month 2 you pay $150 and have charges of $78.24. Finally in Month 3 you pay $250 but make some minor purchase charges of $23.19. What is your new balance after Month 3? How much did you pay in total interest over the three months? Month Payment Expenses Interest New Balance 0 n/a n/a n/a 789.56 1 ____.__ ____.__ ____.__ ______.__ 2 ____.__ ____.__ ____.__ ______.__ 3 ____.__ ____.__ ____.__ ______.__

Explanation / Answer

Opening Balance In credit card $789.56 Add: Purchases $45.69 Less: payment on credit card 120 Total balance A $715.25 Interest at APR 17.5% on opening balance for one month on A $11.51 month 1 ending balance $726.76 Opening Balance In Month 2 $726.76 Add: Purchases $78.24 Less: payment on credit card 150 Total balance B $655.00 Interest at APR 17.5% on opening balance for one month on B $10.60 month 2 ending balance $665.60 Opening Balance In Month 3 $665.60 Add: Purchases $23.19 Less: payment on credit card 250 Total balance C $438.79 Interest at APR 17.5% on opening balance for one month on C $9.71 month 3ending balance $448.50 Total Interest 11.51+10.6+9.71 $31.82 Total Payment 120+150+250 $520

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