Question

You owe $2,264.96 on a credit card at a 14.7% APR. You pay $500.00/month. How many months does it take to pay off your balance?

Answer 1

Answer:

5 months

Step-by-step explanation:

Since, time-to-pay off formula for a credit card is,

$n=\frac{log(\frac{M}{M-Pr})}{log(1+r)}$

Where, P is owing amount,

r is rate per period,

M is payment per period,

Here, P = $ 2,264.96,

M = $ 500.00 per month

APR = 14.7 % = 0.147 ⇒ r = $\frac{0.147}{12}$

Hence, the number of months does it take to pay off the balance,

$n=\frac{log(\frac{500.00}{500.00-2264.96\times \frac{0.147}{12}})}{log(1+\frac{0.147}{12})}$

$=4.68894564931\approx 5$

Therefore, It will take approx 5 months to pay off the balance.

Answer 2

You would pay 500 for 4 months and then you would pay 264.96 in the last month so your answer would be 5