Question

Suppose your AMEX card calculates finance charges using an APR of 16.5%. Your statement sows a balance of $800, and your minimum monthly payment is 6% of that month’s balance.

(a) What is your balance after 12 months if you make no more charges and make only the minimum payment? (8)

b) How long will it take to get your balance under $100. (8)

Answer 1

Answer to Solution APR Monthly APR 16.50% 1.3750% Month Principal Outstanding Interest on Balance Outstanding c/f @ 1.375% 10.34 762.34 9 .85 725.45 9.39 692.26 8.95 659.67 8 .53 628.61 8.12 599.02 7.74 570.82 7 .38543.95 7 .03 518.34 6.70 493.94 6.38 470.69 1st Month 2nd Month 3rd Month 4th Month 5th Month 6th Month 7th Month 8th Month 9th Month 10th Month 11th Month 12th Month 13th Month 14th Month 15th Month 16th Month 17th Month 18th Month 19th Month 20th Month 21st Manth 22nd Month 23rd Month 44R53 800.00 762.34 726.45 692.26 659.67 628.61 599.02 570.82 543.95 518 34 493.94 470.69 448.53 427.42 407.30 388.12 369.85 352.44 335.85 320.04 304.98 290.62 276.94 263.90 251.48 239.64 228.36 217.61 207.36 197.60 188.30 179.44 170.99 162.94 155.27 147.96 141.00 134.36 128.03 122.01 116.26 110.79 105.57 100.60 95.87 Minimum Amount Paid @ Balance 6% of Due 48.00 752.00 45.74716.60 43.596 82.87 41.54 650.72 39.58 620.09 37.72 590.90 35.94 563.08 34.25 536. 57 32.64 511.31 1 31.10 487.24 29.64 464.31 28.24 442.45 26.91 421.62 25.65 401.77 24.44 382.86 23.29 364.84 22.19 347.66 21.15 331.30 20.15 315.70 19.20 300.84 18.30 286.68 17.44 273.18 16.62 260.32 15,83 248.07 15.09 236.39 14.38 225.26 13.70 214.66 13.06 204.55 12.44 194.92 11.86 185.75 11.30 177.00 10.77 168.67 10.26 160.73 24th Month 25th Month 6.08 5.80 427.42 5.52 407.30 5.26 388.12 5.02 | 369.85 4.78 | 352.44 4,56 335.85 4.34 320.04 4.14 304.98 3.94 290.62 3.76 276.94 3.58 263.90 3.41 251.48 3.25 239.64 3.10 228.36 2.95 217.61 2.81207.36 2.68 197.60 2.55 188.30 2.43 179.44 2.32 170.99 2.21 162.94 2.11 155.27 .01 147.96 1.91 141.00 1.82 134 36 1.74 128.03 2 26th Month 27th Month 28th Month 29th Month 30th Month 31st Month 32nd Month 33rd Month 34th Month 35th Month 36th Month 7th Month 28th Month 39th Month 40th Month 41st Month 42nd Month 43rd Month 44th Month 45th Month 145. 95 139.08 132.54 126.30 120.35 1.65 122.01 9.32 8.88 8.46 8.06 7.68 7.32 6.98 6.65 6.33 6.04 5.75 1.58 114.69 109.29 104.14 99.24 94.57 90.12 1.50 1.43 1.36 1.30 1.24 116.26 110.79 105.57 100.60 30 95.87 91.36 1. After 12 months S 448.53 is the balance payment to be make, if only minimun payment is make. 2. It takes 45 months to get the balance under $100 as shown above.