Question

To purchase a new couch that costs 2100 dollars, you set up a store credit card that charges interest at 14.7 percent convertible monthly, beginning immediately. Each month that you do not make a payment (starting one month after you purchase the couch), you are charged a 30 dollar fee that is added to your card balance. Due to Önancial di¢ culties, you cannot make a payment until 6 months after you purchase the couch. To pay o§ the card balance, you decide to make 29 monthly payments that increase by 4.6 percent per month. How much is your Örst payment?

Answer 1

Solution:
Computation of first payment of store credit card
Description	Amount($)
Couch costs	2,100.00
Interest for first month (2,100 x 14.7% /12 months)	25.73
Fee for no payment	30.00
Balance at the end of first month	2,155.73
Interest for second month (2,438.70 x 14.7%/12 months	26.41
Fee for no payment	30.00
Balance at the end of second month	2,212.13
Interest for third month (2,827.19 x 14.7%/12 months)	27.10
Fee for no payment	30.00
Balance at the end of third month	2,269.23
Interest for fourth month (3,272.79 x 14.7%/12 months)	27.80
Fee for no payment	30.00
Balance at the end of fourth month	2,327.03
Interest for fifth month (3,783.89 x 14.7%/12 months)	28.51
Fee for no payment	30.00
Balance at the end of fifth month	2,385.54
Interest for sixth month (4,370.12 x 14.7%/12 months)	29.22
Fee for no payment	30.00
Balance at the end of sixth month	2,444.76