Question

Question: Assume you have a balance of $1000 on a credit card with an APR of 12%, or 1% per month. You start making monthly payments
of $200, but at the same time you charge an additional $100 per month to the credit card. Assume that interest for a given month is based on
the balance for the previous month. The following table shows how you can calculate your monthly balance. Complete and extend the table to
show the balance at the end of each month until the debt is paid off. How long does it take to pay off the credit carddebt?
nts
Fill out the table row by row and continue until the last full payment. Round to the nearest cent as needed.
Month
Payment
Expenses
Interest
New Balance
a
urces
0
---
$1000
es
1
$200
$100
$10
$910
4/7
fing
2
$200
$100
ection
3
$200
$100
4
$200
$100

Answer 1

1. The extension of the table to show the month-end balances until full debt settlement is as follows:

Month  Payment  Expenses  Interest   New Balance

0                  $0          $0            $0        $1,000

1              $200         $100       $10        $910 ($1,000 - $200 + $100 +$10)

2             $200         $100      $9.10     $819.10 ($910 - $200 + $100 + $9.10)

3             $200         $100      $8.19     $727.29 ($819.10-$200+$100+$8.19)

4             $200         $100      $7.27    $634.56 ($727.29-$200+$100+$7.27)

5             $200         $100      $6.35    $540.91 ($634.56-$200+$100+$6.35)

6             $200         $100      $5.41     $446.32 ($540.91-$200+$100+$5.41)

7             $200         $100      $4.46    $350.78 ($446.32-$200+$100+$4.46)

8            $200         $100       $3.51    $254.29 ($350.78-$200+$100+$3.51)

9            $200        $100        $2.54   $156.83 ($254.29-$200+$100+$2.54)

10          $200         $100        $1.57    $58.40 ($156.83-$200+$100+$1.57)

11           $200         $100        $0.58   ($41.02) ($58.40-$200+$100+$0.58)

Data and Calculations:

Credit card balance = $1,000

APR = 12%

Monthly APR = 1%

Monthly payments = $200

Monthly charge = $100

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