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Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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
Transcribed Image Text: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 $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.)
Expert Solution
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Step 1
Solution:
An equal amount paid each period is known as annuity.
Future value of annuity = PMT x [(1+r)n - 1] / r
where, PMT = equal periodic amount
r = periodic interest rate
n = number of periods
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