Question
In: Accounting
13) The following table shows annual rates for various types of loans in 2015. Assume monthly...
13)
The following table shows annual rates for various types of loans in 2015. Assume monthly payments and compounding periods. HINT [See Examples 5 and 7.]
|
Loan |
30-Year |
15-Year |
5-Year |
4-Year |
Credit |
|
October |
3.93 |
3.14 |
4.30 |
4.24 |
13.10 |
|
November |
4.09 |
3.31 |
4.31 |
4.26 |
13.10 |
|
December |
4.09 |
3.34 |
4.34 |
4.29 |
13.10 |
You currently owe $9000 on your credit card, which charges interest at the October 2015 rate. What is the least you need to pay per month to pay off the card in 5 years? (Round your answer to the nearest cent.)
$
Solutions
Expert Solution
@ the rate of interest of 13.1 % 9000 USD will be paid in 60 equal monthly installments (5 years). The monthly installment amount is USD 205. Below is the calculations for your reference (example of 8 months is given.
| month | date | Amount owed (balance as on date | Interest @ 13.1% | Monthly payment | towards principal |
| 1 | Oct-15 | 9,000 | 98 | 205 | 107 |
| 2 | Nov-15 | 8,893 | 97 | 205 | 108 |
| 3 | Dec-15 | 8,785 | 96 | 205 | 109 |
| 4 | Jan-16 | 8,676 | 95 | 205 | 110 |
| 5 | Feb-16 | 8,566 | 94 | 205 | 111 |
| 6 | Mar-16 | 8,454 | 92 | 205 | 113 |
| 7 | Apr-16 | 8,342 | 91 | 205 | 114 |
| 8 | May-16 | 8,228 | 90 | 205 | 115 |
| Total payouts | 3,320 | 12,300 | 8,980 |
|
|
ekkarill92 answered 10 months agoRelated Solutions
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