Kevin Moore received his monthly credit card statement from his bank. His current outstanding balance is $3,168.97. The minimum monthly payment due is 1% of the outstanding balance or $20, whichever is higher. The bank uses the Average Daily Balance method to calculate the periodic interest charges. Show how the bank calculated the total estimated payments for the two scenarios: (a) the minimum payment only option and (b) $111 per month.

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Payment Information New Balance . . Minimum Payment Due (Current $3,168.97 $32.00 Month) Minimum Payment Due (Past Due) Total New Minimum Payment Due Payment Due Date .. $0.00 $32.00 Jun 22, 2011 Late Payment Warning: If we do not receive your minimum payment by the date listed above, you may have to pay up to a $35.00 Late Fee. Minimum Payment Warning: If you make only the minimum payment each period, you will pay more in interest and it will take you longer to pay off your balance. For example: If you make no additional charges using this card and each month you pay... You will pay off the And you will end up paying an estimated balance shown on this statement in about... total of... Only the minimum $5,408 9 years payment $11 $4,010 (Savings = 3 years $1,398)