Friday, August 12, 2011

Calculate the length of time and the total amount you will spend to pay off your card to include interest?

You are considering purchasing a new 46" 3D HDTV television and charging it to your credit card. The television costs $2500. You currently have a balance of $150 on your credit card, which charges you an annual interest rate of 11.9% (0.9917% monthly). You figure you will be able to make payments of $600 per month to pay off the card. Let's assume you will not charge any more purchases to your card until the current balance and television are completely paid off. Your credit card calculates interest using the average daily balance method. If your billing date is the 1st of each month, you purchase the television on July 3, and you always make your credit card payments on the 5th of the month.

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