Assume that you have a balance of $3000 on your American Express credit card and
ID: 3137501 • Letter: A
Question
Assume that you have a balance of $3000 on your American Express credit card and that you make no more charges on the card. Assume that American Express charges 20.5% APR and that the minimum payment is 2% of the balance each month. Assume also that you make only the minimum payments. Make a spreadsheet listing the items below for each month until the payment drops below $50. (Round your answers to the nearest cent.)
Fill in any area that has a question mark.
Month Previousbalance Minimum
payment Purchases Finance
charge New
balance 1 $ $ $0.00 $50.23 $ 2 $ $ $0.00 $50.06 $ 3 $ $ $0.00 $49.90 $ 56 $2507.06 $ $0.00 $41.97 $ 57 $ $ $0.00 $41.84 $
Explanation / Answer
so, as per spreadsheet calculation, in 64th month minimum payment will drop below $50.
Month Previous Balance Minimum payment Purchase Finance Charge (APR) New Balance 1 3,000.00 60.00 0 51.25 2991.25 2 2,991.25 59.82 0 51.10 2982.53 3 2,982.53 59.65 0 50.95 2973.83 4 2,973.83 59.48 0 50.80 2965.15 5 2,965.15 59.30 0 50.65 2956.50 6 2,956.50 59.13 0 50.51 2947.88 7 2,947.88 58.96 0 50.36 2939.28 8 2,939.28 58.79 0 50.21 2930.71 9 2,930.71 58.61 0 50.07 2922.16 10 2,922.16 58.44 0 49.92 2913.64 11 2,913.64 58.27 0 49.77 2905.14 12 2,905.14 58.10 0 49.63 2896.67 13 2,896.67 57.93 0 49.48 2888.22 14 2,888.22 57.76 0 49.34 2879.79 15 2,879.79 57.60 0 49.20 2871.39 16 2,871.39 57.43 0 49.05 2863.02 17 2,863.02 57.26 0 48.91 2854.67 18 2,854.67 57.09 0 48.77 2846.34 19 2,846.34 56.93 0 48.62 2838.04 20 2,838.04 56.76 0 48.48 2829.76 21 2,829.76 56.60 0 48.34 2821.51 22 2,821.51 56.43 0 48.20 2813.28 23 2,813.28 56.27 0 48.06 2805.07 24 2,805.07 56.10 0 47.92 2796.89 25 2,796.89 55.94 0 47.78 2788.74 26 2,788.74 55.77 0 47.64 2780.60 27 2,780.60 55.61 0 47.50 2772.49 28 2,772.49 55.45 0 47.36 2764.40 29 2,764.40 55.29 0 47.23 2756.34 30 2,756.34 55.13 0 47.09 2748.30 31 2,748.30 54.97 0 46.95 2740.29 32 2,740.29 54.81 0 46.81 2732.29 33 2,732.29 54.65 0 46.68 2724.32 34 2,724.32 54.49 0 46.54 2716.38 35 2,716.38 54.33 0 46.40 2708.46 36 2,708.46 54.17 0 46.27 2700.56 37 2,700.56 54.01 0 46.13 2692.68 38 2,692.68 53.85 0 46.00 2684.83 39 2,684.83 53.70 0 45.87 2676.99 40 2,676.99 53.54 0 45.73 2669.19 41 2,669.19 53.38 0 45.60 2661.40 42 2,661.40 53.23 0 45.47 2653.64 43 2,653.64 53.07 0 45.33 2645.90 44 2,645.90 52.92 0 45.20 2638.18 45 2,638.18 52.76 0 45.07 2630.49 46 2,630.49 52.61 0 44.94 2622.81 47 2,622.81 52.46 0 44.81 2615.16 48 2,615.16 52.30 0 44.68 2607.54 49 2,607.54 52.15 0 44.55 2599.93 50 2,599.93 52.00 0 44.42 2592.35 51 2,592.35 51.85 0 44.29 2584.79 52 2,584.79 51.70 0 44.16 2577.25 53 2,577.25 51.54 0 44.03 2569.73 54 2,569.73 51.39 0 43.90 2562.24 55 2,562.24 51.24 0 43.77 2554.76 56 2,554.76 51.10 0 43.64 2547.31 57 2,547.31 50.95 0 43.52 2539.88 58 2,539.88 50.80 0 43.39 2532.47 59 2,532.47 50.65 0 43.26 2525.09 60 2,525.09 50.50 0 43.14 2517.72 61 2,517.72 50.35 0 43.01 2510.38 62 2,510.38 50.21 0 42.89 2503.06 63 2,503.06 50.06 0 42.76 2495.76 64 2,495.76 49.92 0 42.64 2488.48