Question

Mark’s new car is a lemon. It breaks down within 6 months of purchasing the car. Mark cannot afford the repairs so he charges $2,000 in car repairs on the store account and plans on paying a minimum monthly fee of $50. The card carries a 25% Annual Percentage Rate (APR). How much are those car repairs really costing Brent and when will he pay off the amount owed?

Answer 1

The worth of the repairs is actually $3,686.25 and the amount will be paid off after 6.07 years. This is assuming that the APR is effective and compounded per year.
The $50 can be converted to a Future Value per year before the rest of the given can be used.