Question

** ADVANCED ALGEBRA WITH FINANCIAL APPLICATIONS** HELP ME PLEASE




Larry has been paying the minimum balance on his three credit cards each month. He has outlined the minimum payments for the next four months. He decides to snowball his debt after Month 1 according to the interest rate instead of paying the minimum payment.

Part 1 (2 points): Explain, using complete sentences, how the total monthly payment will change for each month.

Part 2 (2 points): Explain, using complete sentences, how the payments for each credit card will change for each month.

Answer 1

Larry's Minimum Payment Summary
Month
Card A(18% APR )Card B(20% APR) Card C(24% APR) Total Monthly Payment
1 $62.57 $151.76 $181.74 $396.07
2 $60.94 $147.97 $176.51 $385.42
3 $58.72 $143.65 $171.14 $373.51
4 $56.43 $139.38 $166.58 $362.39


medal to anyone that answers it correctly, ive been trying to figure this out for an hour

Answer 2

theres that vague notion of a snowball again ....

Answer 3

I actually found a definition of that in my lesson

Answer 4

The debt snowball strategy is a method of debt reduction that requires paying off debt in a certain order. Basically, minimum payments are made on all but one balance. As these minimum payments decline, the additional money is used to apply a greater payment to the remaining card balance.

Answer 5

Snowballing by paying the highest interest balance first will result in the quickest payoff time and the lowest interest expense.
Snowballing by paying the lowest balance first can result in the fastest payoff of one of the debts. Snowballing using the balance will have a slightly higher interest expense but is helpful when consumers need the psychological boost of paying off a debt.

Answer 6

I don't know if that helps

Answer 7

Based on your description of snowballing, Larry will continue to pay the minimum on cards A and B.

The first month he spends $396.07

they don't say, but I assume he can spend that same amount next month (if this assumption is not true, I don't see how you can answer the question)

that means he can pay off 396.07 - (60.94+ 147.97) = 187.16 on card C (highest interest card)
which is a few dollars more than the minimum.

But I don't know what to do on the 3rd and later months ...

Answer 8

but in general terms we can answer the questions
Part 1 (2 points): Explain, using complete sentences, how the total monthly payment will change for each month.

the total monthly payment will stay constant at 396.07


Part 2 (2 points): Explain, using complete sentences, how the payments for each credit card will change for each month.

the payments for credit cards A and B will be as given in Larry's table
the payment for card C will go up each month

Answer 9

Hmm, okay so for Part 1 what would I say?

Answer 10

? I posted a guess.

Answer 11

ok