1. You charged $1,000 on your credit card for Christmas presents. Your credit card company charges you 16% annual interest, compounded monthly. If you make the minimum payments of $25 per month, how long will it take ( to the nearest month) to pay off your balance? I beleive the answer is n=58 payments but the formula I used includes the use of log function. I know there is another way to figure the answer out I just can't remember the formula.
2. Assume you are to receive a 10-year annuity with annual payments of $800. The first payment will be received at the end of Year 1, and the last payment will be received at the end of Year 10. You will invest each payment in an account that pays 7 percent compounded annually. Although the annuity payments stop at the end of year 10, you will not withdraw any money from the account until 20 years from today, and the account will continue to earn 7% for the entire 20-year period. What will be the value in your account at the end of Year 20 (rounded to the nearest dollar)? The formula I'm working with is 800 + 800((1/.07)-(1/(.07(1.07)^20)) My professor got this to equal 21743 in class but I can't get my calculator to give me the same answer so I either wrote the formula wrong or am not working the calculator correctly. Any help would be appreciated.