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)
Period in years = 8.2
Or 8.2 years
Working:
|
Using financial calculator BA II Plus - Input details: |
# |
|
FV = Future Value = |
$0.00 |
|
PV = Present Value = |
-$21,000.00 |
|
I/Y = Rate / Frequency of compounding = 24.7/12 = |
2.0583333333 |
|
PMT = Payment or coupon or regular payment / frequency = |
$500.00 |
|
CPT > N = Total number of periods = |
98.10 |
|
Convert N periods in total number of years = N/12 |
8.2 |
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