Your APR is 7.75%. Now, suppose (but don’t actually do this) that you buy that l
ID: 2715622 • Letter: Y
Question
Your APR is 7.75%.
Now, suppose (but don’t actually do this) that you buy that lavish home entertainment system that you always wanted for $5,000, and you charge this amount on your new credit card. Now, assume you pay this back by making $100 payments per month.
a. Develop an amortization table assuming $100 payments for the first 12 months’ payment. To get credit, you must show all of your work. How much of the $100 is interest and how much is being used to pay down your debt during the first 12 months? Note that you do not need to do these calculations by had – there are many websites that will calculate amortization tables and excel has an add in feature to calculate this.
b. At a rate of $100 per month, how many months will it take to repay the entire $5,000?
Explanation / Answer
a) Amortisation Table
b)
No of month it would take to repay the entire 5000 = nper(rate,pmt,pv,fv)
No of month it would take to repay the entire 5000 = nper(7.75%/12,100,-5000,0)
No of month it would take to repay the entire 5000 = 60.58
No of month it would take to repay the entire 5000 = 61
Period Monthly payment Interest Expenses Principal Amortisation Loan Amount 0 5,000.00 1 100 32.29 67.71 4,932.29 2 100 31.85 68.15 4,864.14 3 100 31.41 68.59 4,795.55 4 100 30.97 69.03 4,726.52 5 100 30.53 69.47 4,657.05 6 100 30.08 69.92 4,587.13 7 100 29.63 70.37 4,516.76 8 100 29.17 70.83 4,445.93 9 100 28.71 71.29 4,374.64 10 100 28.25 71.75 4,302.89 11 100 27.79 72.21 4,230.68 12 100 27.32 72.68 4,158.00Related Questions
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