Assume you have a balance of $3,200 on your credit card that you want to pay off. Calculate your monthly payment and the total payment under the given condition

Question

Assume you make no additional charges to the card. The credit card APR is 22% and you want to pay off the balance in 2 years.

 

 

Need help on how to solve this

 

 

A- $142.12; $3.066.34

 

B- $249.91; $5,997.86

 

C-$166.01; $3,984.24

 

D- $199.50; $4,298.87

Answer 1

The credit card balance is the present value of an ordinary annuity whose annual interest and term you are given. The variables are

 

PV = 3,200

FV = 0

N = 24

i% = 1.8333

PMT = ?

 

Solving for PMT yields 166.01 and multiply it by 24= ?

 

Well, I suspect you can do that much. You need to learn this stuff. You will use it all your life.