What will be the balance in your savings account in one year

Reference no: EM131916164

Problem

Suppose you have accumulated a credit card balance of $500, at an annual interest rate of 10 percent. You are also planning to open a new savings account that accumulates interest at an annual rate of 3 percent. You just got your paycheck and have $200 that you can use either to pay down your debt or open your savings account.

a. If you use the full $200 to pay down your debt, what will your credit card balance be in one year? Assume no additional credit card payments during this time.

b. If, instead, you put the full $200 into your savings account, what will be the balance in your savings account in one year, assuming you make no additional deposits during this time? What will your credit card balance be, assuming you make no additional payments during this time because your payment requirements have been deferred for one year?

c. In one year, how much money will you have lost if you deposit the $200 in your savings account compared to paying down your credit card?

Reference no: EM131916164

Questions Cloud

What is the stock price of gomi waste disposal expected : What is the current price of Oxygen Optimization stock?What is the stock price of Gomi Waste Disposal expected to be in 1 year?

Explain why kala is likely to be disappointed : Toni and Kala are new coworkers. They make a plan to go out together every Thursday night. Explain why Kala is likely to be disappointed.

Determine what is the required rate of return : The next dividend payment by Dizzle, Inc., will be $2.80 per share. The dividends are anticipated to maintain a growth rate of 5.25 percent, forever.

Why strategic behavior required to win presidential election : Why is strategic behavior required to win a presidential election? Describe some of the rules, strategies, and payoffs that define this game in the real world.

What will be the balance in your savings account in one year : You put the full $200 into your savings account, what will be the balance in your savings account in one year, assuming you make no additional deposits.

Would you agree that computerized corporate planning models : .Certain liability and net worth items generally increase spontaneously with increases in sales.

External audits are precisely the same as internal audits : In today's age of social media, organizations include resources such as YouTube and Twitter as part of their crisis management tool kit. true or false ?

How much will jamie pay in interest : If Jamie borrows the $1,500, how much will she pay in interest? How much does the trip cost her if she borrows rather than dips into her savings?

What is the minimum income required : Mr. and Mrs. Young are considering the purchase of a $250,000 property. What is the minimum income required? rounded to nearest dollar.

User Account

All Pages