Explanation:
<u>Part 1</u>
The total monthly payment will remain level at the amount currently scheduled for Month 1. The revised totals are shown at the bottom of the attachment.
When Card C is fully paid, the same total payment will continue to be used until all card debts are paid.
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<u>Part 2</u>
The excess over the sum of minimum payments will be applied to Card C (24% rate). The minimum payment will continue to be made for the other credit cards. The revised Card C payments are shown at the bottom of the attachment.
When Card C is fully paid, the excess over the sum of minimum payments will be applied to Card B (20% rate).
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<em>Comment on the question</em>
You can't think too much about the given numbers. The minimum payment amounts given here decrease way faster than you would expect. For example, the $1.36 decrease in the minimum payment for Card A from Month 1 to Month 2 corresponds to a balance decrease of more than $90 when the interest rate is 1.5% per month. That is not possible if the payment is only $32.19.
Apparently, the question is not about the actual numbers. Rather, it is about the strategy of debt reduction. Some (bogus) numbers are given here just so you have something to think about.
The approach described in the problem statement has been given the name "debt avalanche" to distinguish the approach from Dave Ramsey's "debt snowball." The "debt snowball" approach pays off the <em>minimum balance</em> first, not the highest interest rate. It also includes some extra cash above the sum of minimum balances. ($100 is suggested; more is better.) The psychological effect of the quick win is considered to be more important than the extra cost of carrying the higher-rate debt for a longer period.
Answer:
100% of the 2nd monthly payment go toward the repayment of principal.
Step-by-step explanation:
The loan taken is the Principal which is mentioned as $72,500 with interest at a nominal rate of 20%. Firstly, it is important to understand that nominal rate means <em>non-compounding </em>rate. Simply put will be a "<em>one-time charged" </em>rate on the loan. Since this is given as 20% of the Principal. It is calculated thus:
×
= $14,500. So the interest on the loan is $14,500. Added to the Principal the total amount to be paid back by the company becomes: $72,500 + $14,500 = $87,000. To pay back this amount at equal end-of-month installments in 1 year (12 months), we divide the total amount by 12. i.e
= $7250. This means, the monthly payment will be $7,250. Since the monthly payment pays only 10% of the initial principal $72,500. By the second month only 20% of the Principal would have been paid. So all of the monthly payment will go towards repaying the principal
Answer:
The equation will be:
Step-by-step explanation:
Given that at one station, gas costs $2.75 per gallon.
Let 'g' be the number of gallons of gas purchases
Let 'C' be the total cost
Thus, the expression for total cost can be generated by multiplying the price per gallon by the number of gallons.
Thus,
C = 2.75g
Therefore, the equation will be:
24/2=12
The unit rate is 12 packets per pound.
Hope this helps!