You have the below list of debts. Creditor Discover Card Bank Loan Apple Store Best Buy Target APR Balance 19.99% 6.99% 24.99% 21.99% 14.99% Minimum Payment Priority of payments made 2,000 50 4,000 100 750 30 1,200 40 400 25 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 will pay for each debt. 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. Instructions Payoff Strategy Strategy 1: Reduce the total amount of interest paid. Priority 5 Debt Priority 3 De Priority 4 Debt Priority 1 Debt Priority 2 Debt Name Starting Balance APR Month Interest Balance interest Balance Payment Balance Payment Balance Payment Interest Balance Payment Payment [Interest 2 3 4 5 2 9 10 11 12 13 14 15 16 17 18 20 23 24