Assume you purchase a new iPhone for $1,199 using your credit card, which has a finance charge of 22.9% APR. The minimum payment is either 3% of your balance or $25, whichever is larger. You use this credit card to pay for your iPhone, and you make no additional charges.

Part 1 Create an Excel spreadsheet to record the carryover balance, finance charge, new balance, and minimum payment for the first year. You will need to complete the table through the Month 13 Carryover Balance. Assume you are only making the minimum payment, and since we know this, there will be a finance charge Month 1. Answer these questions in a Word document: a. What are the total finance charges for Year 1? b. What are the total minimum payments for Year 1? c. How much is your balance reduced by the end of Year 1? d. What percentage of your payments went to finance charges over this year?

Part 2 Copy your spreadsheet, then extend your table in Excel to find: Answer these questions in the Word document: a. How long will it take to pay off the iPhone at a minimum payment of either 2% or $35, whichever is larger? You will need to adjust the last payment to pay off the bill because it will be less than the minimum payment. Answer in years, with months as a remainder. b. What are the total finance charges? c. What are the total minimum payments? d. What percentage of your payments went to finance charges?

Part 3 Copy your spreadsheet from Part 2. Answer the following questions in the Word document: What if you had "one less Starbucks" and paid an additional $5 a month on your balance? (The $5 value also applies to the minimum payment dollar amount of $35). Delete the part of the table you no longer need. a. How does this affect the time it takes to pay off the balance? a. How long does it take pay off the iPhone when you pay an additional $5 a month? Give a specific value in years, with months as a remainder. b. How much less time does it take to pay off the iPhone, when compared to Part 2 scenario? b. How much would you save in total finance charges? c. The amount you save (answer to 3b) is what percent of the total finance charges from Part 2 (2b)?