Suppose Olivia has $6,660 in credit card debt on the VB credit card which has an annual interest rate of 18.8%. Olivia is considering transferring her debt to the LA credit card that offers 0% interest for 18 months.
(a) If Olivia makes a payment of $370 per month on the VB credit card, what will her balance be at the end of 18 months? Assume that no additional charges are made to the card. (Suggestion: You are trying to find the future value of a debt that has a present value of $6,660. Use the formula for the future value of an ordinary annuity. Round your answer to the nearest cent.) $
(b) If Olivia makes a payment of $370 per month on the LA credit card, what will her balance be at the end of 18 months? Assume that no additional charges are made to the card. (Suggestion: None of the payment goes to interest on the debt. Round your answer to the nearest cent.) $
(c) How much lower is the balance due after 18 months on the LA credit card?
Note: Some credit card companies may charge a transfer fee which will affect the benefit of a 0% introductory rate. Assume that there is no transfer fee. (Round your answer to the nearest cent.) $