Joey realizes that he has charged too much on his credit card and has racked up...

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Joey realizes that he has charged too much on his credit card and has racked up...

Joey realizes that he has charged too much on his credit card and has racked up $5,000 in debt. If he can pay $150 each month and the card charges 18 percent APR (compounded monthly), how long will it take him to pay off the debt?

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Answer 1

Answer #1

Amount due = $5,000
Monthly payment = $150

Annual interest rate = 18.00%
Monthly interest rate = 18.00% / 12
Monthly interest rate = 1.50%

Let it will take n months to pay off the debt

$5,000 = $150 * PVIFA(1.50%, n)

Using financial calculator:
I = 1.50%
PV = -5000
PMT = 150
FV = 0

N = 46.56

Number of months = 46.56 or 47

Therefore, it will take 47 months to pay off the debt

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Answer 2

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