Question

assume that you have a balance of $3000 on your mastercard and that you make no more charges. assume that mastercard charges 13% apr and that each month you make only the minimum payment of 5% of the balance. what will the balance be after 30 months? enter your answer rounded to two decimal places.

Answer 1

The balance after thirty months would be $881.57.

Balance after the minimum payments is calculated as follows:

Initial balance * ((1+r)(1-m))^t

Where r = APR/12 and m = monthly minimum per cent

The Given information is:

Initial balance = 3000

R = .13/12 = 0.01083 and

m = 0.05

Putting these values in the formula, we get

3000*((1+0.01083)(1-0.05))^t = 3000*(1.01083*0.95^t

= 3000*(0.960)^t

So we have the equation = 3000*(0.960)^t.

To find the balance after 30 months, put the value of t in the equation above,

We know, t = 30 then,

3000*(0.960)^30 = 3000*0.2938 = 881.57

So we will have an amount of at least $881.57 after six years.

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