Question

You have a balance of $4,000 on your credit card with a 12% interest rate (1% per month). You plan to make no new purchases with the card. You want to reduce your balance to zero over the next year. Which monthly payment is most likely to accomplish this in 11 or 12 months?

a) $100
b) $250
c) $400
d) $1,000

Answer 1

Answer: $400

Explanation: i took the test

Answer 2

The answer for this would be option c) $400 dollars per month. This is how you calculate this. First calculate how much you need to pay for annual interest in dollars. 12% per annum is 12/100 multiplied by $4000. This is $480 per annum. Add that to the main amount, so now you have to pay $4480 at the end of the year. To calculate how much you need to pay per month, divide the final ammount by 12 months. So $4480/12 = $373.33. You need to pay $373.33 every month for 12 months to pay off this amount. You can round it off to $400 per month.