Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You have $500 a month of income that can be fully used to payoff debts. Your Objective: Be debt free as quickly as possible, minimize

image text in transcribed

You have $500 a month of income that can be fully used to payoff debts. Your Objective: Be debt free as quickly as possible, minimize the total amount of interest you will pay. 1. Complete the entire yellow section of the worksheet 'Payoff Strategy' to show how you would pay each creditor from now until all debts are paid off. 2. Complete the yellow section above to show the order in which you prioritized the debts, and how long it took to pay off each debt. Hints: 1. First, determine the order in which you should pay off the debts, considering your objective. Cells E4 through E8. 2. Fill in rows 4, 5, and 6 of the payoff strategy with the information for each of the debts. 3. Fill in the associated minimum payment for Month 1 for all the debts, except priority 1. 4. Determine how much can be paid to Priority 1 Debt. 5. Calculate the interest you v ill pay for each det.t. Formula: Interest = Prior Balance * (APR/12) 6. Calculate the new balance for each debt. Formula: New Balance = Prior Balance Payment + Interest 7. Repeat for each month until debt 1 is paid off. 8. Now calculate the new payment amount for Debt 2 . 9. Calculate the interest you will pay for each of the remaing debts. Formula: Interest = New Balance * (APR/12) 10. Calculate the new balance for each debt. Formula: New Balance = Prior Balance Payment + Interest 11. Repeat the process until Debt 2 is paid off. 12. Now calculate the payment for Debt 3 . 13. Continue for all debts until all are payed off. 14. Fill in # of payments made for each of the debts above. Cells F4 through F8. You have $500 a month of income that can be fully used to payoff debts. Your Objective: Be debt free as quickly as possible, minimize the total amount of interest you will pay. 1. Complete the entire yellow section of the worksheet 'Payoff Strategy' to show how you would pay each creditor from now until all debts are paid off. 2. Complete the yellow section above to show the order in which you prioritized the debts, and how long it took to pay off each debt. Hints: 1. First, determine the order in which you should pay off the debts, considering your objective. Cells E4 through E8. 2. Fill in rows 4, 5, and 6 of the payoff strategy with the information for each of the debts. 3. Fill in the associated minimum payment for Month 1 for all the debts, except priority 1. 4. Determine how much can be paid to Priority 1 Debt. 5. Calculate the interest you v ill pay for each det.t. Formula: Interest = Prior Balance * (APR/12) 6. Calculate the new balance for each debt. Formula: New Balance = Prior Balance Payment + Interest 7. Repeat for each month until debt 1 is paid off. 8. Now calculate the new payment amount for Debt 2 . 9. Calculate the interest you will pay for each of the remaing debts. Formula: Interest = New Balance * (APR/12) 10. Calculate the new balance for each debt. Formula: New Balance = Prior Balance Payment + Interest 11. Repeat the process until Debt 2 is paid off. 12. Now calculate the payment for Debt 3 . 13. Continue for all debts until all are payed off. 14. Fill in # of payments made for each of the debts above. Cells F4 through F8

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Forecasting Principles And Practice

Authors: Rob J Hyndman, George Athanasopoulos

1st Edition

0987507109, 978-0987507105

More Books

Students also viewed these Finance questions

Question

Describe various competitive compensation policies.

Answered: 1 week ago