1. **Problem Statement:** Minh-Tri and Thea want to consolidate their debts using a HELOC with monthly payments and simple interest. We need to calculate monthly repayment schedules for all debts over 12 months, including principal and interest, and analyze the impact of consolidation. 2. **Formulas and Rules:** - Simple interest formula: $$I = P \times r \times t$$ where $P$ is principal, $r$ is annual interest rate (decimal), $t$ is time in years. - Monthly interest: $t = \frac{1}{12}$ year. - Monthly interest payment: $$I_{month} = P \times r \times \frac{1}{12}$$ - Total monthly payment = Principal payment + Interest payment. - For "plus interest" payments, interest is added to the stated payment. - For fixed payments including interest, principal payment = total payment - interest. 3. **Monthly Payment Schedules:** - For each debt, create a 12-month table with columns: Opening Balance, Interest, Principal Payment, Total Payment, Closing Balance. - Calculate interest each month on the opening balance. - Deduct principal payment from opening balance to get closing balance. - Repeat for 12 months. 4. **Example Calculation for Minh-Tri’s Parents Loan:** - Balance: 15,300, Interest: 0%, Yearly payment: 5,100. - Monthly payment: $5,100 / 12 = 425$ (no interest). - Each month principal payment = 425, closing balance reduces by 425 monthly. 5. **Example Calculation for Thea’s Parents Loan:** - Balance: 22,400, Interest: 3.5% simple interest. - Monthly interest rate: $0.035 / 12 = 0.0029167$. - Monthly interest first month: $22,400 \times 0.0029167 = 65.33$. - Monthly payment principal: $5,600 / 12 = 466.67$ plus interest. - Total payment first month: $466.67 + 65.33 = 532$. - Closing balance after first month: $22,400 - 466.67 = 21,933.33$. - Repeat for 12 months updating principal and interest. 6. **Student Loans and Credit Cards:** - Use prime rate + 3% for student loans and HELOC. - Use given interest rates for credit cards. - Calculate monthly interest and payments similarly. 7. **Consolidation Decision:** - Debts with interest rates higher than HELOC (prime + 3%) should be consolidated. - Lower or equal interest rate debts remain with original lenders. 8. **HELOC Monthly Payment Schedule:** - Sum consolidated debts principal and interest. - Calculate monthly interest on HELOC balance. - Use $300 plus interest$ monthly payment. 9. **Changes in Payments:** - Calculate total monthly payments before and after consolidation. - Calculate total payments and interest over 12 months. - Calculate interest saved and change in average interest rate (weighted average). 10. **Summary:** - Monthly repayment schedules for 12 months for all debts. - Identification of debts to consolidate. - Impact on monthly cash flow and total interest saved. **Note:** Detailed tables and calculations should be prepared in Excel or similar software for accuracy and included in the appendix of the report.