Refer to the following for Exercises 31-35, about credit card payments. Many credit cards use a similar formula for the minimum payment, which is the new balance (if less than $25), or else the greatest of $25 or 1% of the new balance (excluding interest and late fees), plus the interest billed, rounded down to the nearest dollar. Any late fees are then added on to this calculated amount. Moreover, when any interest is due, there is a minimum charge of $1.50.

Question 22.62

image 32. (Requires a spreadsheet) Repeat Exercise 31, but this time you miss the first payment, incurring a $35 late fee and an increase to a penalty APR of 30%, corresponding to approximately 2.5% per month.

  1. How many months—of paying your bill on time!—will it take to pay off the balance of $2500 by making the minimum payment each month? (You must pay the $35 late fee the first month, over and above the minimum payment on the $2500 and one month’s interest.)
  2. How much will you pay altogether?