Credit Cards, Interest, Loans, Retirement and Savings Plan
1. You have to charge $500 of car repairs and have no additional charges during the next two months. You will just pay the minimum payment each month for the next two months. The Annual Percentage Rate (APR) is 15.99% and the minimum payment each month is 4% of the balance. Determine the finance charge, new balance, and minimum payment required for each of the next two months, and the starting balance for month 3 in the table below (round all answers to the nearest cent)
Month Starting balance Finance charge New balance Minimum payment
2. Find the balance on an account if you invest $100 at 5% for 10 years compounded annually. (round to the nearest cent)
3. Find the balance on an account if you invest $100 at 5% for 10 years compounded monthly. (round to the nearest cent)
Questions 4-6. Your friend purchases a $165,000 house. He is able to make a 20% down payment. The bank will give him a 30-year loan with a 4% APR.
4. How much money will he borrow for his mortgage? (round to the nearest dollar)
5. What would his monthly payment be? (round to the nearest cent)
6. How much interest will your friend pay over 30 years of his loan? (round to the nearest cent)
Questions 7-10. Your friend is able to invest $120 a month in a 401(k) with a predicted growth rate of 3%. Your friend's company will match 50% of your friend's contributions.
7. How much does your friend's company contribute every month? (round to the nearest dollar)
8. Use Excel's FV function to find the account balance after 20 years (round to the nearest cent)
9. How much was deposited over 20 years by your friend? By the company? (round to the nearest dollar)
10. How much did your friend earn in interest? (round to the nearest cent)