Addison has a balance of $3,450 on her credit card that has an APR of 18%. She currently pays the minimum monthly payment of $86.25. If Addison wants to pay off her balance in 24 months, determine the monthly payments she would need to make. Choose the following modification with the least cuts to her current expenses that will allow Addison to pay off her balance in 24 months.

Income
WAgES
$2,278.00
EXPENSES
Rent
$950.00

Utilities
$232.45

Food/Clothes
$445.00

Entertainment
$270.00

Car
$200.00

Credit Card
$86.25

Cell Phone
$77.89
Net Income $16.41

a.
Addison can eliminate $73 from Food/Clothes and $100 from Entertainment.
b.
Addison can eliminate $45 from Food/Clothes and $41 from Entertainment.
c.
Addison can eliminate $25 from Food/Clothes and $22 from Entertainment.
d.
The minimum payment is enough to pay off the balance within 24 months.

ANSWER IS B)Addison can eliminate $45 from Food/Clothes and $41 from Entertainment.

Based on the information given, Addison should eliminate $45 from the money budget for Food/Clothes ($445.00) and $41 from Entertainment ($270.00).

Given the following data:

Balance = $3,450.

APR = 18%.

Monthly payment = $86.25.

Time = 24 months (2 years).

How to calculate monthly payment.

Mathematically, the monthly payment for a credit card can be calculated by using this formula:

[tex]M=P(\frac{r}{1-(1+r)^{-nt}} )[/tex]

Where:

P is the principal.

r is the interest rate.

M is the monthly payment.

t is the time.

n is the number of times it's compounded.

In this scenario, Addison should eliminate $45 from the money budget for Food/Clothes ($445.00) and $41 from Entertainment ($270.00) because they are the least cuts to her current expenses and they would avail her an opportunity to pay off her balance in 24 months (2 years).

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