The McCloud family is purchasing a new refrigerator. The price is $2000. They are charging the purchase to the store credit card, and are making the minimum payment of 3% of the balance. The company tells them that when making the minimum monthly payment, 80% of the minimum payment goes toward interest and the remaining portion of the minimum payment goes toward the principal. 1. Calculate the monthly payment details for the first 6 months of minimum payments. Number of Months (n) 1 2 3 4 5 6 Balance Before Monthly Payment ($) Minimum Monthly Payment ($) Amount Paid Toward Principal ($) Amount Paid Toward Interest ($) Balance After Monthly Payment ($) 2. After 3 years, what is the remaining balance? Show your work. 3. What changes would you recommend the McCloud's make to their payment plan? Explain your reasoning.

The McCloud family is purchasing a new refrigerator. The price is $2000. They are charging the purchase to the store credit card, and are making the minimum payment of 3% of the balance. The company tells them that when making the minimum monthly payment, 80% of the minimum payment goes toward interest and the remaining portion of the minimum payment goes toward the principal. 1. Calculate the monthly payment details for the first 6 months of minimum payments. Number of Months (n) 1 2 3 4 5 6 Balance Before Monthly Payment ($) Minimum Monthly Payment ($) Amount Paid Toward Principal ($) Amount Paid Toward Interest ($) Balance After Monthly Payment ($) 2. After 3 years, what is the remaining balance? Show your work. 3. What changes would you recommend the McCloud's make to their payment plan? Explain your reasoning.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 14P

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