1. what is the effective rate of interest | ||||||
Effective rate of interest =(1+ r/m)^m -1 | ||||||
r= 18% | ||||||
m =12 | ||||||
Effective rate of interest =(1+ 0.18/12)^12 -1 =0.1956=19.56% | ||||||
2) First Month interst | ||||||
Monthly interst rate =18%/12 =1.5% | ||||||
interest on First month payment =$8574*1.5% =$128.61 | ||||||
3) if Montlhy payment is $225 , How much time it will take to payoff the $8574 | ||||||
Month | Opening Balance | Interest @1.5% | Total | Instalment | Closing balance | |
1 | 8574 | 129 | 8703 | 225 | 8478 | |
2 | 8478 | 127 | 8605 | 225 | 8380 | |
3 | 8380 | 126 | 8505 | 225 | 8280 | |
4 | 8280 | 124 | 8405 | 225 | 8180 | |
5 | 8180 | 123 | 8302 | 225 | 8077 | |
6 | 8077 | 121 | 8199 | 225 | 7974 | |
7 | 7974 | 120 | 8093 | 225 | 7868 | |
8 | 7868 | 118 | 7986 | 225 | 7761 | |
9 | 7761 | 116 | 7878 | 225 | 7653 | |
10 | 7653 | 115 | 7767 | 225 | 7542 | |
11 | 7542 | 113 | 7656 | 225 | 7431 | |
12 | 7431 | 111 | 7542 | 225 | 7317 | |
13 | 7317 | 110 | 7427 | 225 | 7202 | |
14 | 7202 | 108 | 7310 | 225 | 7085 | |
15 | 7085 | 106 | 7191 | 225 | 6966 | |
16 | 6966 | 104 | 7070 | 225 | 6845 | |
17 | 6845 | 103 | 6948 | 225 | 6723 | |
18 | 6723 | 101 | 6824 | 225 | 6599 | |
19 | 6599 | 99 | 6698 | 225 | 6473 | |
20 | 6473 | 97 | 6570 | 225 | 6345 | |
21 | 6345 | 95 | 6440 | 225 | 6215 | |
22 | 6215 | 93 | 6309 | 225 | 6084 | |
23 | 6084 | 91 | 6175 | 225 | 5950 | |
24 | 5950 | 89 | 6039 | 225 | 5814 | |
25 | 5814 | 87 | 5901 | 225 | 5676 | |
26 | 5676 | 85 | 5761 | 225 | 5536 | |
27 | 5536 | 83 | 5619 | 225 | 5394 | |
28 | 5394 | 81 | 5475 | 225 | 5250 | |
29 | 5250 | 79 | 5329 | 225 | 5104 | |
30 | 5104 | 77 | 5181 | 225 | 4956 | |
31 | 4956 | 74 | 5030 | 225 | 4805 | |
32 | 4805 | 72 | 4877 | 225 | 4652 | |
33 | 4652 | 70 | 4722 | 225 | 4497 | |
34 | 4497 | 67 | 4564 | 225 | 4339 | |
35 | 4339 | 65 | 4404 | 225 | 4179 | |
36 | 4179 | 63 | 4242 | 225 | 4017 | |
37 | 4017 | 60 | 4077 | 225 | 3852 | |
38 | 3852 | 58 | 3910 | 225 | 3685 | |
39 | 3685 | 55 | 3740 | 225 | 3515 | |
40 | 3515 | 53 | 3568 | 225 | 3343 | |
41 | 3343 | 50 | 3393 | 225 | 3168 | |
42 | 3168 | 48 | 3216 | 225 | 2991 | |
43 | 2991 | 45 | 3036 | 225 | 2811 | |
44 | 2811 | 42 | 2853 | 225 | 2628 | |
45 | 2628 | 39 | 2667 | 225 | 2442 | |
46 | 2442 | 37 | 2479 | 225 | 2254 | |
47 | 2254 | 34 | 2288 | 225 | 2063 | |
48 | 2063 | 31 | 2094 | 225 | 1869 | |
49 | 1869 | 28 | 1897 | 225 | 1672 | |
50 | 1672 | 25 | 1697 | 225 | 1472 | |
51 | 1472 | 22 | 1494 | 225 | 1269 | |
52 | 1269 | 19 | 1288 | 225 | 1063 | |
53 | 1063 | 16 | 1079 | 225 | 854 | |
54 | 854 | 13 | 867 | 225 | 642 | |
55 | 642 | 10 | 651 | 225 | 426 | |
56 | 426 | 6 | 433 | 225 | 208 | |
57 | 208 | 3 | 211 | 225 | -14 | |
So if he makes $225 per month it will take 57 Months period to pay off the credit card fully |
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