Question

Consider a credit card with a balance of $6000 and an APR of 16.99

%. In order to pay off the balance in 2 years, what monthly payment
would you need to make? Round your answer to the nearest cent, if

Answer 1

To pay off a credit card balance in 2 years with a balance of $6000 and an APR of 16.99%, the monthly payment needed would be approximately $281.51.

Step-by-step explanation:

To calculate the monthly payment needed to pay off a credit card balance in a given time period, we can use the formula for fixed monthly payment:

Monthly Payment = P * (r * (1+r)^n) / ((1+r)^n - 1)

Where:

• P is the initial balance
• r is the monthly interest rate (APR divided by 12)
• n is the total number of payments (months)

Applying this formula to the given credit card with a balance of $6000 and an APR of 16.99%, and a desired repayment period of 2 years:

Monthly Payment = 6000 * (0.1699/12 * (1+0.1699/12)^24) / ((1+ 0.1699/12)^24 - 1)

Monthly Payment ≈ $281.51