You and your friends want to go to Cancun for Spring Break. You imagine the trip will cost around $2000, for the flight, hotel, food, etc. and you plan to put it all on your new credit card. Discover it Student Cash Back credit card Intro purchase APR is 0% for 6 months from date of account opening then the standard purchase APR applies. Intro Balance Transfer APR is 10.99% for 6 months from date of first transfer, for transfers under this offer that post to your account by January 10, 2022 then the standard purchase APR applies. Standard purchase APR 12.99% variable to 21.99% variable, based on your creditworthiness. Cash APR: 24.99% variable. Variable APRs will vary with the market based on the Prime Rate. Minimum interest charge: If you are charged interest, the charge will be no less than $.50. Cash advance fee: Either $10 or 5% of the amount of each cash advance, whichever is greater. Balance transfer fee: 3% Intro fee on balances transferred by January 10, 2022 and up to 5% fee for future balance transfers will apply. Annual Fee: None.Rates as of September 30, 2021. We will apply payments at our discretion, including in a manner most favorable or convenient for us. Each billing period, we will generally apply amounts you pay that exceed the Minimum Payment Due to balances with higher APRs before balances with lower APRS as of the date we credit your payment. This is your first credit card so you do not have established credit and your APR ends up around 17.99%. 1. If you only charge the $2000 and do not make any payments. How much will you owe at the end of a year? (We are ignoring all the additional fees that would result from not making payments.) 2. How much interest did you accrue? What percent of the total amount charged is interest? 3. Calculate the APY for a 17.99% interest rate. 4. In reality you would make payments. Suppose you can dedicate $50 per month towards your credit card. Fill in the following table for those three months. APR: Periodic Interest Month Balance Payment New Balance 1 $ 2000.00 $ 50 2 $ 50 3 $ 50 Below is a completed table for the first year. APR: 17.99% Month Payment $ 50.00 Interest $ 1 29.98 2 50.00 50.00 29.68 29.38 3 4 29.07 5 28.76 Balance $ 2.000.00 $ 1.979.98 $ 1.959.67 $ 1.939.05 $ 1.918.11 $ 1.896.87 $ 1.875.31 $ 1.853.42 $ 1.831.21 $ 1.808.66 $ 1.785.78 $ 1.762.55 $ $ $ $ $ $ 50.00 50.00 50.00 50.00 6 $ $ $ $ $ $ $ $ $ $ $ 28.44 28.11 New Balance $ 1,979.98 $ 1,959.67 $ 1,939.05 $ 1,918.11 $ 1,896.87 $ 1,875.31 $ 1,853.42 $ 1,831.21 $ 1,808.66 $ 1,785.78 $ 1,762.55 $ 1,738.97 7 8 50.00 50.00 27.79 27.45 9 $ $ $ $ 10 50.00 50.00 27.11 26.77 11 12 50.00 $ 26.42 ! 5. Paying $50 per month how much interest did you pay the within the first twelve months? 6. What percent of the total amount originally charged has gone to interest? Compare this to the APY you calculated in #3. You and your friends want to go to Cancun for Spring Break. You imagine the trip will cost around $2000, for the flight, hotel, food, etc. and you plan to put it all on your new credit card. Discover it Student Cash Back credit card Intro purchase APR is 0% for 6 months from date of account opening then the standard purchase APR applies. Intro Balance Transfer APR is 10.99% for 6 months from date of first transfer, for transfers under this offer that post to your account by January 10, 2022 then the standard purchase APR applies. Standard purchase APR 12.99% variable to 21.99% variable, based on your creditworthiness. Cash APR: 24.99% variable. Variable APRs will vary with the market based on the Prime Rate. Minimum interest charge: If you are charged interest, the charge will be no less than $.50. Cash advance fee: Either $10 or 5% of the amount of each cash advance, whichever is greater. Balance transfer fee: 3% Intro fee on balances transferred by January 10, 2022 and up to 5% fee for future balance transfers will apply. Annual Fee: None.Rates as of September 30, 2021. We will apply payments at our discretion, including in a manner most favorable or convenient for us. Each billing period, we will generally apply amounts you pay that exceed the Minimum Payment Due to balances with higher APRs before balances with lower APRS as of the date we credit your payment. This is your first credit card so you do not have established credit and your APR ends up around 17.99%. 1. If you only charge the $2000 and do not make any payments. How much will you owe at the end of a year? (We are ignoring all the additional fees that would result from not making payments.) 2. How much interest did you accrue? What percent of the total amount charged is interest? 3. Calculate the APY for a 17.99% interest rate. 4. In reality you would make payments. Suppose you can dedicate $50 per month towards your credit card. Fill in the following table for those three months. APR: Periodic Interest Month Balance Payment New Balance 1 $ 2000.00 $ 50 2 $ 50 3 $ 50 Below is a completed table for the first year. APR: 17.99% Month Payment $ 50.00 Interest $ 1 29.98 2 50.00 50.00 29.68 29.38 3 4 29.07 5 28.76 Balance $ 2.000.00 $ 1.979.98 $ 1.959.67 $ 1.939.05 $ 1.918.11 $ 1.896.87 $ 1.875.31 $ 1.853.42 $ 1.831.21 $ 1.808.66 $ 1.785.78 $ 1.762.55 $ $ $ $ $ $ 50.00 50.00 50.00 50.00 6 $ $ $ $ $ $ $ $ $ $ $ 28.44 28.11 New Balance $ 1,979.98 $ 1,959.67 $ 1,939.05 $ 1,918.11 $ 1,896.87 $ 1,875.31 $ 1,853.42 $ 1,831.21 $ 1,808.66 $ 1,785.78 $ 1,762.55 $ 1,738.97 7 8 50.00 50.00 27.79 27.45 9 $ $ $ $ 10 50.00 50.00 27.11 26.77 11 12 50.00 $ 26.42 ! 5. Paying $50 per month how much interest did you pay the within the first twelve months? 6. What percent of the total amount originally charged has gone to interest? Compare this to the APY you calculated in #3