1. You have a credit card on which you owe a balance of $3,000. The card carries an interest rate of 22% (APR), compounded monthly. You decide to cut up the card, and pay it off by paying the minimum payment due each month, which is a constant $60 (HINT: The amount you owe the credit card company today is a loan).

a. State the information provided by each number in the problem.

1 (continued). You have a credit card on which you owe a balance of $3,000. The card carries an interest rate of 22% (APR), compounded monthly. You decide to cut up the card, and pay it off by paying the minimum payment due each month, which is a constant $60 (HINT: The amount you owe the credit card company today is a loan).

b. What is the Future Value of this loan?

1 (continued). You have a credit card on which you owe a balance of $3,000. The card carries an interest rate of 22% (APR), compounded monthly. You decide to cut up the card, and pay it off by paying the minimum payment due each month, which is a constant $60 (HINT: The amount you owe the credit card company today is a loan).

c. Calculate the EAR for this loan. Show the formula with the numbers plugged in.

1 (continued). You have a credit card on which you owe a balance of $3,000. The card carries an interest rate of 22% (APR), compounded monthly. You decide to cut up the card, and pay it off by paying the minimum payment due each month, which is a constant $60 (HINT: The amount you owe the credit card company today is a loan).

d. Calculate how long will it take to pay off the loan in months. Show the calculator inputs.

e. Calculate how long will it take to pay off the loan in years. Show your work.

1 (continued). You have a credit card on which you owe a balance of $3,000. The card carries an interest rate of 22% (APR), compounded monthly. You decide to cut up the card, and pay it off by paying the minimum payment due each month, which is a constant $60 (HINT: The amount you owe the credit card company today is a loan).

f. Calculate the monthly payment you would need to pay if you want to pay the card off in 3 years (NOTE: the Credit Card Act of 2009 requires banks to show the monthly payment needed to pay off the card in 36 months). Show your calculator inputs.