Question: You are a CFA chartered financial analyst An overextended client

You are a CFA (chartered financial analyst). An overextended client has come to you because she needs help paying off her credit card bills. She owes the amounts on her credit cards listed in the file S14_98.xlsx. The client is willing to allocate up to $5000 per month to pay off these credit cards. All cards must be paid off within 36 months. The client’s goal is to minimize the total of all her payments. To solve this problem, you must understand how interest on a loan works. To illustrate, suppose the client pays $5000 on Saks during month 1. Then her Saks balance at the beginning of month 2 is 20,000 - [5000 - 0.005(20,000)]. This follows because she incurs 0.005(20,000) in interest charges on her Saks card during month 1. Help the client solve her problem. Once you have solved this problem, give an intuitive explanation of the solution found by Solver.

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  • CreatedApril 01, 2015
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