a.
To determine: Thenumber of months before which the credit card would be paid off.
Nominal rate of interest:
The nominal rate of interest is the annual rate, which is charged on the credit cards. The nominal annual rate is converted into effective annual rate to compare the rates of two different banks.
b.
To determine: The months before the person pays off the debt.
Nominal rate of interest:
The nominal rate of interest is the annual rate, which is charged on the credit cards. The nominal annual rate is converted into effective annual rate to compare the rates of two different banks.
c.
To determine: The amount more in the total payments under $10-a-month plan than a $35-a-month plan.
Nominal rate of interest:
The nominal rate of interest is the annual rate, which is charged on the credit cards. The nominal annual rate is converted into effective annual rate to compare the rates of two different banks.
Want to see the full answer?
Check out a sample textbook solutionChapter 5 Solutions
Fundamentals of Financial Management (MindTap Course List)
- Simon recently received a credit card with a 15% nominal Interest rate. With the card, he purchased an Apple iPhone 11 for $660. The minimum payment on the card is only $10 per month. a. If Simon makes the minimum monthly payment and makes no other charges, how many months will it be before he pays off the card? Do not round Intermediate calculations. Round your answer to the nearest whole number. month(s) b. If Simon makes monthly payments of $35, how many months will it be before e pays off the debt? Do not round Intermediate calculations. Round your answer to the nearest whole number. month(s) c. How much more in total payments will Simon make under the $10-a-month plan than under the $35-a-month plan? Do not round Intermediate calculations. Round your answer to the nearest cent. $arrow_forwardSimon recently received a credit card with an 18% nominalinterest rate. With the card, he purchased an Apple iPhone 7 for $372.71. The minimumpayment on the card is only $10 per month. a. If Simon makes the minimum monthly payment and makes no other charges, howmany months will it be before he pays off the card? Round to the nearest month.b. If Simon makes monthly payments of $35, how many months will it be before he paysoff the debt? Round to the nearest month.c. How much more in total payments will Simon make under the $10-a-month plan thanunder the $35-a-month plan? Make sure you use three decimal places for N.arrow_forwardeBook Simon recently received a credit card with a 17% nominal interest rate. With the card, he purchased an Apple iPhone 7 for $300.00. The minimum payment on the card is only $20 per month. a. If Simon makes the minimum monthly payment and makes no other charges, how many months will it be before he pays off the card? Do not round intermediate calculations. Round your answer to the nearest whole number. month(s) b. If Simon makes monthly payments of $60, how many months will it be before he pays off the debt? Do not round intermediate calculations. Round your answer to the nearest whole number. month(s) c. How much more in total payments will Simon make under the $20-a-month plan than under the $60-a-month plan. Do not round intermediate calculations. Round your answer to the nearest cent. $arrow_forward
- 1. Your card has a limit of $1,000. You plan to go on a honeymoon in one year and want to use the credit card as a backup. You plan to request your limit to be raised after three months of charging only the following: $150 in month 1; $200 in month 2; and $199 in month 3. Each month you have paid the balance in full. What average percentage of your credit limit did you use each month?arrow_forwardBrandon has reached his credit card limit of $5000.00. Using an online calculator, Brandon determined that if he pays $180.00 per month, it will take him 39 months to pay off the credit card. Which of the following represents the total interest Brandon will pay when his debt is paid off? A $1,700.40 B $2,020.00 C $1,100.00 D $858.10 Need ASAP pleasearrow_forwardAlice has a balance of $19.000 on her credit card. The card carries a 22.00% annual rate of interest. The bank requires a minimum payment of 4.00% of the outstanding balance, but no less than $50.00 each month. If Alice wants to pay off the balance in 9 years, how much EXTRA must she pay every month in addition to the required minimum payment? Round your answer to the NEAREST dollar. Do NOT use a dollar sign.arrow_forward
- To rent an apartment, Nick has to pay the first month of rent plus the last month of rent and a security deposit. The total that he has to come up with is $7,485. He has $1,150 available and decides to take the remainder out as a cash advancement on his credit card. The interest is 25.25 % compounded daily. If Nick waits to pay off the cash advance after 7 months, how much does he owe? Assume that each month has 30 days.arrow_forwardA man plans to take a vacation in 4 years. He wants to buy a certificate of deposit for $1200 that he will cash in for the trip. What is the minimum annual interest rate he must obtain on the certificate if he needs at least $1700 for the trip? Assume that the interest on the loan is computed using simple interest The rate he must obtain is ___%arrow_forwardYou have just entered college and have decided to pay for your living expenses using a credit card that has no minimum monthly payment. You intend to charge $1,150 per month on the card for the next 45 months. The card carries a monthly interest rate of 1.2%. How much money will you owe on the card 46 months from now, when you receive your first statement post-graduation? After 45 months you will owe $ (Round to the nearest cent.)arrow_forward
- You have just entered college and have decided to pay for your living expenses using a credit card that has no minimum monthly payment. You intend to charge $950 per month on the card for the next 45 months. The card carries a monthly interest rate of 1%. How much money will you owe on the card 46 months from now, when you receive your first statement post-graduation?arrow_forwardDr. Dennis Natali plans to take advantage of 0% interest balance transfer credit card offer to pay off a $7250 loan he has.if his loan is at 7.5% interest for 12 months ,what is his payment? How much will he save in interest?arrow_forwardJeanette took out a loan from the bank today for X. She plans to repay this loan by making payments of $100.00 per month for a certain amount of time. If the interest rate on the loan is 0.66 percent per month, she makes her first $100.00 payment later today, and she makes her final monthly payment of $100.00 in 12 months, then what is X, the amount of the loan? A O An amount less than $1,153.00 or an anmount greater than $1,324.00 O An amount equal to or greater than $1,153.00 but less than $1,199.00 O An amount equal to or greater than $1,199.00 but less than $1,245.00 O An amount equal to or greater than $1,245.00 but less than $1,275.00 O An amount equal to or greater than $1,275.00 but less than $1,324.00arrow_forward
- Essentials Of InvestmentsFinanceISBN:9781260013924Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.Publisher:Mcgraw-hill Education,
- Foundations Of FinanceFinanceISBN:9780134897264Author:KEOWN, Arthur J., Martin, John D., PETTY, J. WilliamPublisher:Pearson,Fundamentals of Financial Management (MindTap Cou...FinanceISBN:9781337395250Author:Eugene F. Brigham, Joel F. HoustonPublisher:Cengage LearningCorporate Finance (The Mcgraw-hill/Irwin Series i...FinanceISBN:9780077861759Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan ProfessorPublisher:McGraw-Hill Education