You have a cre dit card with a balance of $754.43 at a 13.6% AP R. You have $300.00 av ailable each month to save or pay down your deb ts.
a. How many m onths will it take to pay off the credit card if you only put h alf of the available money toward the credit card each month and make the payments at the begin ning of the month?
b. How many months will it take to pay off the cre dit card if you put all of the ava ilable money toward the credit card each month and make the payments at the beginning of the month?
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Answer:
Answer:
a. 6, b. 3
Step-by-step explanation:
No need for complicated formulas if you only need the number of months/payments.
Ignore the APR as it won't make such a great amount to add a month payment within short period up to 6 months.
$754.43*0.136*6/12 ≈ $50
a.
You are paying at the beginning of the month.
After the first payment you have a balance:
$754.43 - $150 = $604.43
This amount will be paid off after 5 months as:
$604.43/$150 > 4
So total number of months/payments is 6
b.
Similarly to above, after the first payment the balance is:
$754.43 - $300 = $454.43
This amount will be paid off after 2 months as:
$454.43/$300 > 1
Total number of months/payments is 3.
A. 6
B. 3
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