Reference no: EM132459109
Problem: Alana, a newly graduated student, just moved to a new city to start her first job. In order to assist her with moving expenses, she applied for a credit card. According to its terms, for any payment she makes within a month from the date of purchase, she will be charged no interest; however, if she does not pay off the full balance, interest will be charged daily on the remaining balance effective from the date of purchase. Every month she must make a minimum payment.
On May 01, Alana spent $1850 of her $2000 credit card limit buying furniture for her new apartment. She didn't make any other purchases in the month of May.
a. On June 01, Alana made the minimum payment of $35 that was charged on her credit card. After her payment, interest took effect, and her new balance was $1845.77. What is the nominal interest rate of her credit card compounded daily?
Round your answer to two decimal places, and use this rounded value for the remainder of the case.
b. What annually-compounding rate is equivalent to her daily-compounding credit card rate? c. Alana made no further purchases in the months of June and July, and made the minimum payments of $35 on July 01 and August 01. What will be her credit card balance on August 01, after her minimum payment?
d. Alana was beginning to grow concerned about her growing debt, and wanted to fully pay off her credit card. What three equal payments, on September 01, October 01, and November 01, must she make in order to settle her debt?
e. After settling her debt on November 01, how much did Alana pay in interest towards her credit card since May 01?
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