Question

Amber has opened two credit cards in the last year. Use the information on each credit card located in the table below to answer the question that follows.


Account Name Account Number Date Opened Balance Past Due Account Status Credit Limit
Credit Card A xxxx 5/8/10 $2,397.67 $0.00 PAYS AS AGREED $16,000
Credit Card B xxxx 6/30/10 $1,218.30 $0.00 PAYS AS AGREED $5,500


What is Amber’s overall debt-to-credit ratio?

Answer 1

@jim_thompson5910

Answer 2

if you can wrap your mind around this one, you have to be god lol

Answer 3

speaking of wrapping...

Answer 4

what about wrapping?

Answer 5

the table/text is

Answer 6

i know...

Answer 7

i guess just tell me how to find out a debt to credit ratio?

Answer 8

one sec

Answer 9

its just this and one more question, then im done!!! for tonight

Answer 10

@jim_thompson5910 JIMMMMMMMMMMMMMMM, I NEEEEEEEEED YOU FOR TWO MORE PROBLEMS!!!!!!!

Answer 11

working on it...

Answer 12

thanks :P

Answer 13

looking up a term

Answer 14

what term?

Answer 15

looking up how exactly debt to credit is defined, I'm getting conflicting definitions at the moment

Answer 16

bummer :(

Answer 17

I'll just pick one and go with it

Answer 18

haha okay, sounds cool with me

Answer 19

it looks like 2397.67+1218.30 = 3,615.97 is the total balance (for the two cards combined)

Answer 20

the total credit limit is 16000+5500 = 21,500

Answer 21

yes, you are right sir

Answer 22

so the debt to credit ratio is

(amount of debt)/(total credit limit) = 3,615.97/21,500 = 0.1681846511628

Answer 23

so roughly 16.8% of the total credit limit is already used up and tied to other previous debts

Answer 24

which rounds to .17

Answer 25

yeah

Answer 26

so 17%

Answer 27

which would be 17%

Answer 28

yep

Answer 29

yep, thats one of the choices!!!

Answer 30

can i just ask one more question on here?

Answer 31

ok gereat

Answer 32

great*

Answer 33

yeah sure

Answer 34

Zoe purchased an entertainment center for $3,257 using a 12-month deferred payment plan with an interest rate of 28.05%. She did not make any payments during the deferment period. What will the total cost of the entertainment center be if she must pay it off within four years after the deferment period?

Answer 35

the choices are

$3,257.00

$4,297.69

$7,195.68

$8,994.60

Answer 36

the 12 month deferment plan means that no monthly payments are made for 12 months

Answer 37

i understand

Answer 38

so it's like a "buy now, pay later" plan

Answer 39

yep yep

Answer 40

this has a catch though, just because you're not making payments doesn't mean that interest isn't going up

Answer 41

i know that too, it sucks

Answer 42

yeah that's how they get you lol

so that initial balance of 3,257 sits in the account for 12 months and it jumps to

3,257(1+0.2805/12)^(12*1) = 4,297.69

Answer 43

I KNEW IT YAY, i got that exact answer

Answer 44

so when you finally start that first payment, the balance isn't 3,257..it's really 4,297.69

Answer 45

we're not done yet

Answer 46

they put that answer to trick you

Answer 47

awww. i was so happy

Answer 48

im sad now... i thought i got it right

Answer 49

lol finance does that to people...pops a lot of bubbles

Answer 50

okay, continue then lol

Answer 51

this is about to be a lot of calculations...

Answer 52

anyways, we have an initial balance of 4,297.69 and we use this to find the monthly payment needed to pay it all off in 4 years (48 months)



M = L[c(1+c)^n]/[(1+c)^n - 1]

L = 4297.69
c = 0.2805/12 = 0.023375
n = 48


M = L[c(1+c)^n]/[(1+c)^n - 1]

M = 4297.69[0.023375(1+0.023375)^48]/[(1+0.023375)^48 - 1]

M = 149.91

Answer 53

the monthly payment is roughly $149.91 a month for 48 months

so you pay a total of 149.91*48 = 7,195.68 dollars

Answer 54

is that the final answer?!?! or is it just a trick?!?!?!

Answer 55

why would i post it if it's a trick?

Answer 56

im just saying haha

Answer 57

the first one was a trick because a lot of people just stop there and they were expecting you to do so

Answer 58

thanks @jim_thompson5910 im done for the night!!! Ill def speak with you soon!!! night

Answer 59

cya