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?
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 |
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