please zoom in!!
Chad and his wife, Kate are newlyweds and want to buy a house in 5 years. They plan to invest their combined savings of $6500 to increase the amount of down payment they will have for their house. Their goal is to have a $10,000 down payment. If they invest their savings at 7% for 5 years, compounded yearly, how much will they have as a down payment for their house in 5 years? What if they invested at 8% for 6 years compounded monthly? Chad and Kate also want to get rid of their credit card debt, they have a credit card that charges 18% interest compounded yearly and has a minimum payment of 2% per month. (Note: the calculator will ask for a minimum monthly payment amount, you will need to figure out the minimum monthly payment amount by using the formula of TOTAL BALANCEX.02-MINIMUM MONTHLY PAYMENT) If they have a $6500 balance and they pay only the minimum payment each month, how long will it take them to pay it off? Using the example of Chad and Kate, were you able to see the magic of compounding interest? Did you also see the bad side effects of compounding interest? The article talks about both the pros and cons of compounding interest. Briefly discuss why compounding interest was good for Chad and Kate and how compounding interest can be harmful in other scenarios? Lastly, would you take the current money saved and pay off your credit cards or would you invest to save for a bigger down payment? On- Chad and his wife, Kate are newlyweds and want to buy a house in 5 years. They plan to invest their combined savings of $6500 to increase the amount of down payment they will have for their house. Their goal is to have a $10,000 down payment. If they invest their savings at 7% for 5 years, compounded yearly, how much will they have as a down payment for their house in 5 years? What if they invested at 8% for 6 years compounded monthly? Chad and Kate also want to get rid of their credit card debt, they have a credit card that charges 18% interest compounded yearly and has a minimum payment of 2% per month. (Note: the calculator will ask for a minimum monthly payment amount, you will need to figure out the minimum monthly payment amount by using the formula of TOTAL BALANCEX.02-MINIMUM MONTHLY PAYMENT) If they have a $6500 balance and they pay only the minimum payment each month, how long will it take them to pay it off? Using the example of Chad and Kate, were you able to see the magic of compounding interest? Did you also see the bad side effects of compounding interest? The article talks about both the pros and cons of compounding interest. Briefly discuss why compounding interest was good for Chad and Kate and how compounding interest can be harmful in other scenarios? Lastly, would you take the current money saved and pay off your credit cards or would you invest to save for a bigger down payment? On
