Question

You have had an average monthly credit card balance of approximately $5,000 for as long as you can remember. You would like to estimate the opportunity cost associated with the interest payments as well as estimate the monthly payment necessary to fully pay off the card. The credit card charges an 18% annual interest rate, compounding monthly.

1. Assuming you make no payments on the credit card and the credit card company remains okay, what would your outstanding card balance be in 3 years, 5 years and 10 years? What excel formula would you employ and what are the relevant inputs?

Rate =

Nper =

Pmt =

[pv] =

[fv] =

[type] =

Amount Owed _____________ 3 yrs, ______________ 5 yrs and _____________ 10 yrs

2. Assume you want to pay off the full credit card balance in 12, 18 or 24 months, what would the respective monthly payment be? Write out the excel formula you would use to perform the calculation.

Pay off in 12 monthly payments of ________________

Pay off in 18 monthly payments of ________________

Payoff in 24 monthly payments of _________________

Answer 1

I HAVE GIVEN CELL REFERENCES AS WELL SO IT IS EASY TO UNDERSTAND. THANK YOU