susan and Joe would like you to help them address some of their short term financial goals. Currently they carry three credit cards and would like you to help them prioritize their debt.
1. They would would like to pay off all their credit card debt within the 18 months.
A. how much do they have to pay monthly to fulfill their goal (for each card)?
Mastercard
Visa
Discover
b. which credit card should they start paying off first? Why?
Additional information
-Visa card is used regularly and paid off monthly
Mastercard: Balance=15100, APR=19.40
Visa=Balance=5800, APR=15.10%
Discover= Balance= 8100, APR=10,50%
2. In addition Susan took out a payday loan off $2400 from Advance America to cover for an unexpected medical bill for her father last month.
A. What is the average payday loan interest rate?
B. what is her monthly payment (assume daily compounding).
c. how much would her balance be if she is not able to pay off her outstanding loan for 12 months (assume daily compounding).
Discover= Balance=8100, APR= 1050%
Homework Answers
Answer 1. (a)
| Balance | APR | EMI | |
| VISA card | $15,100 | 19.40% | $3,055 |
| Master Card | $5,800 | 15.10% | $951 |
| Discover | $8,100 | 10.50% | $1,019 |
| Total | $29,000.00 | $5,026 |
$5026 amount of EMI to be paid for complete the debt in next 18 months. Note- EMI amount has been calculate by using PMT formula in the excel.
(b)- He should start to pay first visa card payment because the rate of interst is higher on this card.
Answer 2.
(a)- I am assuming the rate of interest would be $300% as these type of loan is based on to fulfill their short term needs
(b)- he has to pay $623 per month as EMI.
(c)- he has to pay around ~$7450 if he has not paid the outstanding amount.
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susan and Joe would like you to help them address some of their
short term financial...
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