Question

You have a credit card with a balance of $10,300 and an APR of 16.9 percent...

You have a credit card with a balance of $10,300 and an APR of 16.9 percent compounded monthly. You have been making monthly payments of $205 per month, but you have received a substantial raise and will increase your monthly payments to $255 per month. How many months quicker will you be able to pay off the account?

23.80 months

27.77 months

25.92 months

9.85 months

24.99 months

Homework Answers

Answer #1


Correct option is > 27.77 months

Using financial calculator BA II Plus - Input details:

Payment $205

Payment $255

FV = Future Value =

$0.00

$0.00

PV = Present Value =

$10,300.00

$10,300.00

I/Y = Rate / Frequency of compounding =

1.4083333333

1.4083333333

PMT = Payment or coupon or regular payment / frequency =

-$205.00

-$255.00

CPT > N = Total number of months for paying off =

                   87.925

                   60.158

Difference = Payment @ $205 - Payment @ $255

Difference = 87.925- 60.158

Difference = 27.77 months

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