Instead of using a fixed regular payment (as in annuities), credit cards often charge a minimum payment per month. This amount may change as you pay back the loan. Recall that in order to use annuity formulas, the monthly payments need to be equal, so we will have to use Excel to deal with this! You make a $1000 purchase on a credit card. Because you are extremely tight on cash, you pay the minimum payment each month for the card. The minimum payment for this credit card is 2.5% of the balance of the card; also, the smallest minimum payment allowed is $20. The interest rate on this card is 19.25% compounded monthly. a.) Fill in the following table by hand. Make sure to pay careful attention to what the minimum payment will be each month and show your calculations.

b.) Now use a spreadsheet to achieve the same calculations as above and extend them further! Ensure that your minimum payment is never below $20 (this will require you to go in at some point and alter your payment column).

c.) Now use your spreadsheet to answer the following questions: i. How long will it take to pay off the balance on this credit card? ii. How much will you pay in interest over this time?

Months to Clear Debt (round to the next month) Approximate Interest Paid (use the time from the middle column of this table) Monthly Payment $30 $60 $90 $120 $210 Months to Clear Debt (round to the next month) Approximate Interest Paid (use the time from the middle column of this table) Monthly Payment $30 $60 $90 $120 $210