Question

you have a credit card debt of $5,000. How much should you pay each month to...

you have a credit card debt of $5,000. How much should you pay each month to pay off if your credit card carries an interest rate of 20.05% and you want to pay off the debt with equal monthly payments in two years and six months?

A. $129.73

B. $210.56

C. $213.27

D. None of above

Homework Answers

Answer #1

The amount is computed as shown below:

Present value = Monthly payment x [ (1 – 1 / (1 + r)n) / r ]

r is computed as follows:

= 20.05% / 12 (Since the payment are monthly, hence divided by 12)

= 1.670833333% or 0.01670833333

n is computed as follows:

= 2.5 years x 12 (Since the payment are monthly, hence multiplied by 12)

= 30

So, the amount will be computed as follows:

$ 5,000 = Monthly payment x [ (1 - 1 / (1 + 0.01670833333)30 ] / 0.01670833333 ]

$ 5,000 = Monthly payment x 23.44417269

Monthly payment = $ 5,000 / 23.44417269

Monthly payment = $ 213.27 Approximately

So, the correct answer is option C.

Feel free to ask in case of any query relating to this question

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
6. You charged $2,551 on a credit card. If you pay the minimum payment per month...
6. You charged $2,551 on a credit card. If you pay the minimum payment per month of $44, you will pay it off after making 99 payments. If you pay $10 more per month, you will pay it off 32 months sooner.  How much total interest will you save? 7. You charged $3,205 on a credit card. If you pay the minimum payment per month of $46, you will pay it off after making 297 payments. How much total interest will...
Suppose you have accumulated $21,000 in credit card debt. If the interest rate on the credit...
Suppose you have accumulated $21,000 in credit card debt. If the interest rate on the credit card is 24.7% APR compounded monthly, how many years will it take you to pay off this debt if you pay $500 per month? (Answer to the nearest tenth of a year)
Suppose you have accumulated $21,000 in credit card debt. If the interest rate on the credit...
Suppose you have accumulated $21,000 in credit card debt. If the interest rate on the credit card is 24.2% APR compounded monthly, how many years will it take you to pay off this debt if you pay $500 per month? (Answer to the nearest tenth of a year)
Suppose you have accumulated $20,000 in credit card debt. If the interest rate on the credit...
Suppose you have accumulated $20,000 in credit card debt. If the interest rate on the credit card is 20.1% APR compounded monthly, how many years will it take you to pay off this debt if you pay $500 per month? (Answer to the nearest tenth of a year)
You have $4,500 on a credit card that charges a 21% interest rate. If you want...
You have $4,500 on a credit card that charges a 21% interest rate. If you want to pay off the credit card in 5 years, how much will you need to pay each month (assuming you don't charge anything new to the card)?
You owe $10,000 on a credit card with an interest rate of 15%, which is compounded...
You owe $10,000 on a credit card with an interest rate of 15%, which is compounded monthly. If you make payments of $1,000 per month, how many months will it take you to pay off your debt? (Enter the answer to 2 decimal places)
You spent $2,013 on Christmas gifts and put the purchases on your credit card. Your credit...
You spent $2,013 on Christmas gifts and put the purchases on your credit card. Your credit card has a 14.57% APR compounded monthly. If you want to pay off your credit card balance in 24 months, the first payment next month, how big are the monthly payments? Calculate your answer to two decimal places (e.g. 55.93)
You spent $2,588 on Christmas gifts and put the purchases on your credit card. Your credit...
You spent $2,588 on Christmas gifts and put the purchases on your credit card. Your credit card has a 16.84% APR compounded monthly. If you want to pay off your credit card balance in 15 months, the first payment next month, how big are the monthly payments? Calculate your answer to two decimal places (e.g. 55.93)
Edgar accumulated $5,000 in credit card debt. If the interest rate is 20% per year, and...
Edgar accumulated $5,000 in credit card debt. If the interest rate is 20% per year, and he does not make any payments for 3 years, how much will he owe (in dollars) on this debt in 3 years by each method of compounding? (Simplify your answers completely. Round your answers to the nearest cent.) (a) compound quarterly $ (b) compound monthly $ (c) compound continuously $
Assume you have a balance of 4,800 on your credit card that you want to pay...
Assume you have a balance of 4,800 on your credit card that you want to pay off. Calculate your monthly payment and total payment under the given conditions. The credit card APR is 23% and you want to pay off the balance in 3 years.