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Question

<div class="txt-body question-body"><div class="feedback-rating abuse-flag" data-questionid="12226189"></div><div class="ugc-base"><p>Your Christmas ski vacation was great, but it unfortunately rana bit over budget. All is not lost: You just received an offer inthe mail to transfer your $12,500 balance from your current creditcard, which charges an annual rate of 20.3 percent, to a new creditcard charging a rate of 10.9 percent.</p><p>How much faster could you pay the loan off by making yourplanned monthly payments of $250 with the new card? (Do not roundintermediate calculations and round your answer to 2 decimalplaces, e.g., 32.16.) <span style="line-height:1.6;">Number ofmonths?_____</span></p><p><span style="line-height:1.6;">What if there was a 1 percent feecharged on any balances transferred? Number ofmonths_____?</span></p></div></div>

Explanation / Answer

&lt;div class=&quot;txt-body answer-body&quot;&gt; &lt;div class=&quot;answer-given-body ugc-base&quot;&gt; &lt;p&gt;&lt;br&gt;Card 1 : PV= $12,500 FV= $0 I/Y= 20.3/12, 1.6916667 PMT= -$250 N= ?Number of months is 111.46&lt;/p&gt;&lt;p&gt;Card 2. PV= $12,500 FV= $0 I/Y= 10.9/12, 0.90833, PMT= -$250 N=? Number of months is 66.83.&lt;/p&gt;&lt;p&gt;Card 2 with 1% balance transfer fee. 12500*1.01 = 12,625, PV=$12,625 FV= $0 I/Y= 10.3/12, .908333333 PMT= -$250 N= ? Number ofmonths is 67.75&lt;/p&gt; &lt;/div&gt; &lt;/div&gt;

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