Question

Like many college students, Stephanie applied for and got a credit card that has an annual percentage rate (APR) of 18%. The first thing she did was buy a new HD Television for $300. At the end of the month, her credit card statement said she only needed to make a minimum monthly payment of $10. Assume Stephanie makes her payment when she sees her statement at the end of each month. If Stephanie doesn't charge anything else and only makes the minimum monthly payments, approximately how many months would it take her to completely pay off the HD Television? Assume that the credit card company compounds interest at the end of each month.

a) 40.2 months
b) 37.8 months
c) 35.8 months
d) 19.3 months
e) 46.3 months

Answer 1

A

Step-by-step explanation:

A financial calculator is needed to calculate the number of months needed to pay off for the TV

FV = 0

PMT = $10

PV = -$300

I = 18% / 12 = 1.5%

N = 40.15 years