Question

Michelle has four credit cards with the balances and interest rates listed below. If Michelle wanted to pay off all four credit cards and 36 months, what would your total monthly credit card payment be?

Answer 1

c. $475.67

Explanation:

Card payments can be found using the amortization formula:

A = P(r/n)/(1 -(1 +r/1)^(-nt))

where P is the card balance, r is the annual interest rate, n=12, and t=3, the number of years to payoff.

When the calculation is repetitive, it is convenient to use a calculator or spreadsheet to do the calculations.

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payments on each card

A calculator shows the payments on the cards to be ...

1. $156.16
2. $50.04
3. $96.00
4. $173.33

total of payments

Then the sum of payments is ...

$156.16 +50.04 +96.00 +173.33 = $475.53

The closest answer choice is ...

c. $475.67

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Additional comment

The payment amount can be reduced to about $458.45 by consolidating the balances to the card charging 15% interest.