Question

Today, after having spent hours in the library doing your homework you decide that you need your own personal computer. The laptop you want is priced at $2,600.00 but all you have with you is $250.00 cash. Your only option now is to charge the remaining amount to your credit card. The credit card has an APR of 24.90% starting 6 months after the purchase date. You would be paying off the loan by giving $100.00 each month on the 1st starting in May 2018. A 8.25% sales tax will be applied to the $2,600. If you purchase the laptop today paying only the remaining amount using that credit card, how long will it take you to pay off the loan? Assume: • That is the only payment you charge to the card • No penalty fees are charged since you are very responsible and pay the $100 every month on time and you have sufficient founds so the payment does not go returned • No annual fees Would you wait to purchase the laptop until you have saved enough or would you make the purchase using a credit card? Why or why not?

Please include

interest rate,Cash flow diagram, factors, input data, equations used, calculations, amd solution

Thanks

Answer 1

Total amount to be paid for the laptop= 2600+8.25% of 2600= 2600+214.5=$2814.5

Initial payment made= $250

Remaining amount to be paid= 2814.5-250= $2564.5

Item cost	2564.5
Item cost 2564.5 Interest rate 24.90% Monthly repayment 100 Month Payment Interest Balance 01/05/2018 100 53.21 2517.71 01/06/2018 100 52.24 2469.96 01/07/2018 100 51.25 2421.21 01/08/2018 100 50.24 2371.45 01/09/2018 100 49.21 2320.66 01/10/2018 100 48.15 2268.81 01/11/2018 100 47.08 2215.89 01/12/2018 100 45.98 2161.87 01/01/2019 100 44.86 2106.72 01/02/2019 100 43.71 2050.44 01/03/2019 100 42.55 1992.99 01/04/2019 100 41.35 1934.34 01/05/2019 100 40.14 1874.48 01/06/2019 100 38.90 1813.37 01/07/2019 100 37.63 1751.00 01/08/2019 100 36.33 1687.33 01/09/2019 100 35.01 1622.35 01/10/2019 100 33.66 1556.01 01/11/2019 100 32.29 1488.30 01/12/2019 100 30.88 1419.18 01/01/2020 100 29.45 1348.63 01/02/2020 100 27.98 1276.61 01/03/2020 100 26.49 1203.10 01/04/2020 100 24.96 1128.07 01/05/2020 100 23.41 1051.47 01/06/2020 100 21.82 973.29 01/07/2020 100 20.20 893.49 01/08/2020 100 18.54 812.03 01/09/2020 100 16.85 728.88 01/10/2020 100 15.12 644.00 01/11/2020 100 13.36 557.36 01/12/2020 100 11.57 468.93 01/01/2021 100 9.73 378.66 01/02/2021 100 7.86 286.52 01/03/2021 100 5.95 192.46 01/04/2021 100 3.99 96.45 01/05/2021 96.45 0.00 0.00

Have also attached an image showing the formulas for the cells.