Use the spreadsheet called CompoundInterestWithPaymentsTemplate for the following credit card questions. 1. Suppose Jimmy has $1000 on his credit card and he is going to pay it off at $25 per month.

i. If his credit card rate is a good introductory offer of 3% annual interest, how long will it take him to pay it off?

(Assume no other charges or fees) ii. If his credit card rate isnt so good and he has to pay 15% annual interest, how long will it take him to pay it off (again paying $25 per month)?

Suppose you can afford to put $10,000 down payment on a house (ignore closing costs) and plan to pay $800 per month for a 30 year fixed rate mortgage at 4.25% annual interest. What is the price of a house that you can afford?

iii. How much interest does he pay in total for each of the rates? 3% ___________ 15% __________ 2. At one of the payday loan places in town, one of the deals is that they will loan you $500 if you agree to pay back $575 in two weeks (after payday). Although they count this as a fee rather than interest, calculate the equivalent annual interest rate if you were charged that much interest every two weeks for a year (26 periods). Use the following formula Amount = principle (1+ annual rate/# period /year)^(#period/year) * (#years)

b. A typical credit card offers an interest rate of 15% annual interest, but they compound the interest daily (after a 30-day grace period which we will ignore here). If you have a $500 balance on this credit card, how much would the balance be after two weeks? Compare it to the payday loan amount.

2. Find the present value of a bond that is worth $20000 in 15year in the following account.

In other words, how much would you have to invest today in the account to have it worth $20,000 in 15 years?

3. Consider a different bank account. What would be the APY of an account that promised to double your investment in 15 years?

4. Use the bankrate.com Mortgage Calculator to answer the following: