Question

9. Credit Cards: a. If you have a balance of $1,245.00 on your credit card, how long will it take you to pay off the balance if you make $50.00/month payments until it is paid off? The APR is 19%.

b. What will be your monthly payment on a credit card with a balance of $2,456.80, if you desire to pay it off in 2 years, at an APR of 23.99%?

10. A furniture company allows customers to purchase household furnishings with an in-store loan, pay with cash or a credit card, or Rent-To-Own with a lease agreement. A customer chooses furniture worth $3,225.00 including tax and chooses to Rent-To-Own. Rent to Own Furniture Warehouse • No down payment is required. • The monthly lease payment is $156.99 for 2 years. a. Calculate the total cost to own the furniture using the Rent-To-Own option.

b. What the amount of the finance charge on this purchase?

c. What simple interest percentage rate is this finance charge? Recall: ?? = ??????

Answer 1

Solving question first as HOMEWORKLIB's guidelines:

9.Calculation of no. of month to payoff credit card due:

Monthly payment(P)=$50

Amount due(A)=$1,245

No. of payment(month)=n

Monthly interest rate(r)=19/12=1.583 or 0.01583

P=A[r(1+r)^n/(1+r)^n-1]

$50=$1245*[0.01583(1+0.01583)^n/(1+0.01583)^n-1]

0.04016=[0.01583(1+0.01583)^n/(1+0.01583)^n-1]

n=32

Thus,it will take 32 month to pay off credit card due.