Question

Frank has four different credit cards, the balances and interest information of which are outlined in the table below. He would like to consolidate his credit cards to a single credit card with an APR of 18% and pay off the balance in 24 months. What will his monthly credit card payment be?
Credit Card Balance APR A $2,380 19% B $4,500 15% C $1,580 17.50% D $900 21%

a. $390.00 b. $462.91 c. $467.29 d. $52.00

Answer 1

The correct answer would be option C) $467.29. I just did the exam on Edge and got it right.

Answer 2

Answer:

  c.  $467.29

Step-by-step explanation:

The total of balances is $9360. The payment can be computed using the amortization formula:

  A = P(r/12)/(1 -(1 +r/12)^-n)

where A is the monthly payment, P is the principal (total balance), r is the annual rate, and n is the number of months.

Filling in your numbers, we have ...

  A = $9360(0.18/12)/(1 -(1 +0.18/12)^-24) ≈ $467.29

Frank's monthly credit card payment will be $467.29.