You are delinquent on one of your credit cards. You have agreed with the bank to...

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Question

You are delinquent on one of your credit cards. You have agreed with the bank to...

You are delinquent on one of your credit cards. You have agreed with the bank to make payments of $90 per month starting the end of this month. The interest rate on the balance is 1% per month. If you owe $8,000, how long will it take for the account to be paid off?

a. 10 years

b. 252 months

c. 12 years

d. 221 months

e. It will never be paid off.

business finance

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Answer 1

Answer #1

Information provided:

Future value= $8,000

Monthly payment= $90

Interest rate= 1% per month

The time needed to pay off the credit card is calculated by entering the below in a financial calculator:

FV= 8,000

PMT= 90

I/Y= 1

Press the CPT key and N to compute the time needed.

The value obtained is 220.8192.

Therefore, the time needed to pay off the credit card is alkylated is 220.8192221 months.

Hence, the answer is option d.

In case of any query, kindly comment on the solution.

Add a comment

Answer 2

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