Question

Sarah got a new credit card and has already charged $100 on it. But, she is paying her minimum payments, $20, on time before the end of her grace period. She has an introductory APR on her card of 0% for one year. After the introductory period expires, the APR is 17.99%. How long will it take her to pay off the balance on the card?

A.

nine months

B.

four month

C.

two months

D.

five months

Answer 1

(D) 5 months

Explanation:

Principal amount = $100

APR = 0% for one year

Time = (t) months

Minimum payments = $20

If the monthly payment is $20 and Sarah has to give a total of $100 with no interest.

So, the months needed to pay off the balance of the card =
`(100)/(20)`

= 5 months

Hence, option (D) is correct.