Question

3. Suppose that on January 1 you have a balance of ​$3200 on a credit card whose APR is 19​%, which you want to pay off in 11year. Assume that you make no additional charges to the card after January 1.

a. Calculate your monthly payments.

b. When the card is paid​ off, how much will you have paid since January​ 1?

c. What percentage of your total payment from part​ (b) is​ interest?

Answer 1

Given

Loan = $3200

n = 11 months

APR = 19%

Interest rate (monthly) r = 19% / 12= 0.19 / 12 = 0.01583

a)

Monthly payment,

b)

how much will you have paid since January​ 1

= monthly payment X number of months

= 319.262 X 11

= $3511.882

c)

percentage of your total payment from part​ (b) is​ interest

= (Total payment - Loan amount) / Total payment

= (3511.882 - 3200) / 3511.882

= 0.0888 ~ 8.88%