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.)
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.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
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
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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