Question

b. Let’s say Daryl treats his friends several times during the month and accumulates a debt of $727.56 on his credit card. His credit card and has an interest rate of 20.99%. If he makes payments of $30 per month how long it take him to pay for this generosity which his friends appreciate but he can’t currently afford?

Answer 1

Solution:
Given:
Assuming if interest rate of 20.99% is yearly rate :
Debt Amount i.e PV	$727.56
Interest Rate (Assuming per year rate)	20.99%
Payment every month i.e PMT	$30
Using the NPER Function in excel we will calculate no of months in which $30 will be paid by his friend
NPER(20.99%/12,$30,-$727.56,,0)
31.83358421
It would take around 31.83 Months approx for the debt to be repaid