Suppose you owe $900 on your credit card and you decide to makeno new purchases and to make the minimum monthly payment on theaccount. Assuming that the interest rate on your card is 2?% permonth on the unpaid balance and that the minimum payment is 3?% ofthe total? (balance plus? interest), your balance after t months isgiven by ?B(t)=900?(0.9894t?).Find your balance at each of thegiven times. Complete parts? (a) through? (e) below.
?(a) six months
After six? months, the balance is $
?(Round to the nearest cent as? needed.)
?(b) one year? (remember that t is in? months)
After one? year, the balance is $
?(Round to the nearest cent as? needed.)
?(c) seven years
After seven years, the balance is $
?(Round to the nearest cent as? needed.)
?(d) nine years
After nine ?years, the balance is $
?(Round to the nearest cent as? needed.)
?(e) On the basis of your answers to parts ?(a)–?(d),
what advice would you give to your friends about minimum?payments?
A.
The minimum payment maximizes the? short-term cost and minimizesthe? long-term cost. It would be advisable to pay only the minimummonthly payment to decrease the? short-term cost.
B.
The minimum payment minimizes the? short-term cost and maximizesthe? long-term cost. It would be advisable to pay only the minimummonthly payment to decrease the? short-term cost.
C.
The minimum payment minimizes the? short-term cost and maximizesthe? long-term cost. It would be advisable to pay more than theminimum monthly payment when possible to decrease the overallcost.
D.
The minimum payment maximizes the? short-term cost and minimizesthe? long-term cost. It would be advisable to pay more than theminimum monthly payment when possible to decrease the overallcost.
