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How long will it take to pay off the credit card bill

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Reference no: EM132466636

Find the following values:

a. The future value of a lump sum of $6,000 invested today at 9 percent, annual compounding for 7 years. 

b. The future value of a lump sum of $6,000 invested today at 9 percent, quarterly compounding for 7 years.

c. The present value of $6,000 to be received in 7 years when the discount rate is 9%, annual compounding.

d. The present value of $6,000 to be received in 7 years when the discount rate is 9% quarterly compounding. 

e. What is the present value of an ordinary annuity who pays $1,500 per year for ten years at 8 percent?

f. What is the present value of an annuity due who pays $1,500 per year for ten years at 8 percent? 

g. What is the future value of an ordinary annuity who pays $1,500 per year for ten years at 8 percent?

h. What is the future value of an annuity due who pays $1,500 per year for ten years at 8 percent?

Suppose that an insurance company offers to pay you an annuity of $5,000 per year for 5 years in exchange for $16,000 today. What is the return on this investment measured in percentage terms? (This is an ordinary annuity. Round to two decimal places. Use Excel or a financial calculator to solve this problem).

Robert just received his credit card bill, which has an outstanding balance equal to $8,200. After reviewing his financial position, Robert has concluded that he cannot pay the outstanding balance in full; rather, he has to make payments over time to repay the credit car bill. After thinking about it, Robert decided to cut up his credit card. Now he wants to determine how long it will take to pay off the outstanding balance. The credit card carries a 24 percent interest rate which is compounded monthly. The minimum payment that Robert must make each month is $180.80. Assume that the only charge Robert incurs from month to month is the interest that must be paid on the remaining outstanding balance.

a. If Robert pays $180.80 (the minimum required payment) per month, how long will it take to pay off the credit card bill?

b. How much should Robert pay per month if he wants to pay off the credit card in 3 years (36 months)?

Reference no: EM132466636

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