Final answer:
Jason's monthly payment to pay off his credit card debt of $3,547.25 with an 18.4% annual interest rate compounded monthly over 2 years is approximately $167.86. This calculation is based on standard formulas for installment loan payments.
Step-by-step explanation:
Monthly Payment Calculation
To calculate Jason's monthly payment needed to pay off his credit card debt of $3,547.25 with an annual interest rate of 18.4% compounded monthly over 2 years, we can use the formula for the payment on an installment loan:
P = [rPv] / [1 - (1 + r)^-n]
Where:
P is the monthly payment
r is the monthly interest rate (annual rate / 12)
Pv is the present value of the loan (i.e., the initial loan amount)
n is the total number of payments (months)
First, we convert the annual interest rate to a monthly rate: r = 18.4% / 12 = 1.5333% (or 0.015333 as a decimal).
Next, we determine the number of monthly payments: n = 2 years * 12 months/year = 24 months.
Therefore, the monthly payment P can be calculated as follows:
P = [0.015333 * 3,547.25] / [1 - (1 + 0.015333)^-24]
= 167.86.
the monthly payment P needed to pay off the debt in 2 years is approximately $167.86.
It is important for Jason to make these payments consistently on time and not incur any additional debt on the card to ensure the debt is fully paid off in the 2-year timeframe.