credit cards and finance

Question

you have a balance of $500 on your credit card and make no more charges. Assume the card carries an APR of 19%. Suppose you want to pay off the card in six months by making equal payments each month. What is your monthly payment?

Answer 1

In a simple interest situation/calculation:

$500.00 x 19% = $95.00 per year

div by 12 months = $7.92 per month

x 6 months = $47.50

$500.00 + $47.50 = $547.50

div by 6 equal payments = $91.25 per month

check: $91.25 x 6 months = $547.50

** If interest is capitalized more often than annually, then a future value of current payments method should be used to calculate.