Question

You charged $2,000 on your credit card for a trip during Spring break. Your credit card company charges you 22% annual interest, compounded monthly. If you make the minimum payments of $50 per month, how long will it take ( to the nearest month) to pay off your balance?

Answer choices:

A. 81 months

B. 73 months

C. 70 months

D.79 months

Answer #1

Information provided:

Present value= $2,000

Interest rate= 22%/12= 1.83% per month

Monthly payment= $50

Th time to pay off the balance is calculated by entering the below in a financial calculator:

PV= -2,000

I/Y= 1.83

PMT= 50

Press the CPT key and N to compute the time to pay off the balance.

The value obtained is 72.6109.

Therefore, the time to pay off the balance is **72.6109
months 73 months.**

Hence, the answer is **option b.**

In case of any further queries, kindly comment on the solution

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