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Suppose you owe $3500 on a credit card that charges 16.83% interest. How much would you pay each month if you paid the card off in 3 years?

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Answer:

To calculate the monthly payment needed to pay off a credit card debt of $3500 at an interest rate of 16.83% over a period of 3 years, we can use the following formula:

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

Where:

P = the principal amount (initial debt) = $3500

r = the monthly interest rate (APR/12) = 16.83% / 12 = 0.014025

n = the total number of monthly payments = 3 years * 12 months/year = 36

Substituting the values into the formula, we get:

Monthly Payment = [ 3500 * 0.014025 * (1 + 0.014025)^36 ] / [ (1 + 0.014025)^36 - 1 ]

= $124.57 (rounded to the nearest cent)

Therefore, you would need to pay approximately $124.57 per month to pay off the credit card debt of $3500 at an interest rate of 16.83% over a period of 3 years.

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