M3 Credit Card and Mortgage Worksheet

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National Louis University *

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101

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Mathematics

Date

May 5, 2024

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docx

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3

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MTH 101 Module 3 Credit Card and Mortgage Worksheet I. Credit Cards You have a credit card with a current balance of $150. The interest rate is 13.99% and you use this card to pay your cell phone bill of $89 each month. That is now the only time you use this card. Reminders : Finance charge is found by dividing the interest rate by 12 and then multiplying by the carry- over balance. This formula is entered for you! Excel is a calculator, and you can perform any mathematical calculation by first starting with an equal sign (=). You can autofill columns by dragging on the little green square in the bottom right corner of a cell. At times, you may double-click this square and the formula will automatically populate in the cells below it. Use Excel to answer the following questions: 1. If your minimum payment is 15% of your new balance, what is the remaining balance of your card in month 13 (line 14 in Excel)? [$485.19] 2. If your minimum payment is 50% of your new balance, what is the remaining balance of your card in month 13 (line 14 in Excel)? [$90.06] 3. If your minimum payment is $75, what is the remaining balance of your card in month 13 (line 14 in Excel)? [$369.69] 4. What fixed dollar amount would allow you to pay off the total balance in month 13 (line 14 of Excel)? (Your last payment, in line 14, may be less than the payment of all other months.) Hint: Use guess and check, that is, decide on a payment that will make the balance become zero in month 13, not before and not after. [$101.00] 5. What do you think is a better idea: (a) paying a percentage of your monthly balance, or (b) paying a fixed amount each month? Why? [A percentage is better because it covers both purchases and the interest] Revised 2/13/2023
MTH 101 II. Mortgages Background: You decide to buy a house! The home is priced at $279,000 and the bank has agreed to finance your home at 5.1% for 30 years. Note: Excel approximations do not include property taxes or insurance. Use the Excel document to answer the following questions: Questions on original payment plan: 1. What is the monthly payment? [$1,514.83] 2. How much of the first payment is interest? How much of that first payment goes to reducing the principal? [Interest amount is $1,185.75. $329.08 goes towards reducing the principal.] Use the autofill feature in Excel to drag the month column to 360 months. 3. How much is your last payment? How much of the last payment goes to interest? How much of the last payment goes to completing the payments on the home? [Interest is $6.41 $1,508.40 goes towards reducing the principal] 4. Which is the first month that your starting balance is less than half of the mortgage value? Is this halfway through the life of the mortgage? [243 months is about when 50% of the mortgage has been paid. It is not located halfway through the life of the mortgage.] 5. What is your total repayment of the mortgage? Note that the repayment of a mortgage means the amounts required to be paid for principal and interest. [total repayment equals $547,739.06] Questions on new payment plan: Let’s assume instead you decide to pay an extra $100 for each of your monthly payments. Change the payment value to be $100 more than your payment from question 1. (type in the new value in the Payment cell, H7) 6. With the new payment plan of $100 more each month, when will you make your last payment? [313] Revised 2/13/2023
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