Your Money and and Your Math Chapter 13 1

Credit Cards and Consumer Credit

You can save money if you know the following: interest rate annual fee fixed variable grace period finance charge Credit Cards 3

Find the new balance, assuming that the bank charges 1½% per month on the unpaid balance. Previous New BalancePaymentPurchases 1. $ $10.00 $ $ $75.00 $ Exercises 4

1. Balance = $  $10.00 = $90.00 Finance Charge = $90.00  = $1.35 New Balance = $ $ $50.00 = $ Balance = $  $75.00 = $ Finance Charge = $  = $4.56 New Balance = $ $ $ = $

Use the following rates and payments table to find the following: a.finance charge for the month b.new balance c.the minimum monthly payment 1. Previous New Balance Purchases $271 $91 6

Finance Charge = $  = $4.07 New Balance = $ $ $4.07 = $ Minimum Monthly Payment = 0.05  ($366.07)=$18.30 Solution 7

2. Previous New Balance Purchases $760 $80 8

Bill Seeker bought a boat costing $8500 with $1500 down, the balance plus add-on interest to be paid in 36 monthly installments. If the add-on interest was 18%, find a.the total interest charged. b.the monthly payment to the nearest dollar. Exercise 9

Solution 10

a. Ordinary Annuity: b. Annuity Due: S = future value of annuity R = rate of payment 11

Ordinary Annuity: an account which receives regular periodic deposits at the end of each compounding period. Tyler has set up an ordinary annuity account and will be making monthly deposits of $ with deposits earning 5.2% per year compounded monthly. Find a.the value of the annuity in 12 years. b.the total deposits Tyler will make. c.the interest earned. 12

c. Earned interest = $29,  $21, = $8,

Annuity Due: an account which receives regular periodic deposits at the beginning of each compounding period. Find the future value of an annuity due, if payments are made of $350 and interest is 4.25% compounded quarterly for 21 years. 14

Find the present value of an ordinary annuity, if payments are made of $475 at the end of each quarterly period for 28 years at 8.00% compounded quarterly. 15

Find the amount of each payment to be made into a sinking fund so that enough money will be able to pay off a loan of $29,250 due in 15 years if money is earns 7.25% compounded monthly. Assume this to be an ordinary annuity. 16

If Russell wanted to start making payments today, what would be the amount of each payment into a sinking fund so that enough money will be able to pay off a loan of $18,300 due in 14 years if money is earns 4.00% compounded quarterly. 17 END