Answer:
To calculate the monthly payment needed to pay off a $4,000 credit card debt with a 20% interest rate in 3 years, follow these steps:
1. Convert the interest rate from a percentage to a decimal by dividing it by 100. In this case, the decimal equivalent of 20% is 0.20.
2. Divide the annual interest rate by 12 to find the monthly interest rate. In this case, 0.20 divided by 12 equals approximately 0.0167.
3. Multiply the monthly interest rate by the balance to find the interest charged each month. In this case, 0.0167 multiplied by $4,000 equals approximately $66.67.
4. Add the interest charged each month to the monthly payment to determine the total monthly payment. Let's call this value "X."
5. Multiply the total monthly payment by the number of months (3 years equals 36 months) to find the total amount paid over the 3-year period. In this case, X multiplied by 36 equals $4,000.
6. Rearrange the equation to solve for X: X + ($66.67) = $4,000.
7. Subtract $66.67 from both sides of the equation: X = $4,000 - $66.67.
8. Calculate X: X = $3,933.33.
Therefore, to pay off a $4,000 credit card debt with a 20% interest rate in 3 years, you will need to pay approximately $3,933.33 each month.
Explanation:
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