Question

Tom just received a credit card with an introductory APR of 0% for nine months and a credit limit of $500. The APR for purchases after the introductory period is 19.9%. The penalty APR is 24.9% and the APR for cash advances is 20.4%. Tom uses his card at the mall and spends $360. If Tom wants to have a balance of $0 before his introductory period expires, what monthly payments should he make?

Answer 1

Given:
0% - APR for nine months
$500 - credit limit
19.9% - APR after nine months
24.9% - APR penalty
20.4% - APR for cash advance

Tom spends $360. He wants to have a zero balance before his introductory period expires.

Tom must divide his spending by 9 months.

$360 ÷ 9 mos = $40

Tom should make a monthly payment of $40 for nine months to achieve a balance of zero before the introductory period expires.

Answer 2

The monthly payment Tom must make is $40

Explanation:

The steps taken in solving the problem is shown below

Tom received a credit card with an APR =0%

The credit limit is = $500

The APT for purchases after the introductory period is = 19.9%

The APR penalty is = 24.9%

APR cash advances = 20.4%

Tom spends $360 with his card at the mall, for which He wants his balance to be zero before his introductory period elapses.

For a 9 months period, Tom must divide his spending's /expenses

Therefore

$360 ÷ 9 months gives = $40