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Your Money and and Your Math Chapter 13 1

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Credit Cards and Consumer Credit 13.2 2

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

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Find the new balance, assuming that the bank charges 1½% per month on the unpaid balance. Previous New BalancePaymentPurchases 1. $100.00 $10.00 $50.00 2. $378.93 $75.00 $248.99 Exercises 4

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1. Balance = $100.00 $10.00 = $90.00 Finance Charge = $90.00 0.015 = $1.35 New Balance = $90.00 + $1.35 + $50.00 = $141.35 2. Balance = $378.93 $75.00 = $303.93 Finance Charge = $303.93 0.015 = $4.56 New Balance = $303.93 + $4.56 + $248.99 = $557.48 5

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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

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Finance Charge = $271.00 0.015 = $4.07 New Balance = $271.00 + $91.00 + $4.07 = $366.07 Minimum Monthly Payment = 0.05 ($366.07)=$18.30 Solution 7

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2. Previous New Balance Purchases $760 $80 8

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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

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Solution 10

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

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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 $150.00 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

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c. Earned interest = $29,902.99 $21,600.00 = $8,302.99 13

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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

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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

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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

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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

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