Question

You have $2500 on a credit card.That charges 20% interest rate if you want to pay off the credit card in 4 years.How much will you need to pay each month as soon as you don't charge anything new to the card

Answer 1

Let's calculate the monthly payment to pay off the $2500 credit card balance in 4 years with a 20% interest rate.

Using the formula:

M = P * (r * (1 + r)^n) / ((1 + r)^n - 1)

where P = $2500, r = (20/100)/12, and n = 4 * 12.

Calculating this, the monthly payment would be approximately $73.60.

So, you would need to pay approximately $73.60 each month to pay off the credit card in 4 years without charging anything new to the card.

Answer 2

Answer:

65.70$

Step-by-step explanation:

(the equation is in the attached)

Starting amount: 2500

Annual interest: 20%

number of years: 4

First, we need to convert the annual interest rate to a monthly interest rate. Since there are 12 months in a year:

r= 20%/12 = 0.20/12

Now, we can calculate the number of payments (n)

n = 4 x 12 = 48

After all of that, we substitute the values into the formula. (second image)

After we calculate the value, M is approximately equal to 65.69605 which rounds up to 65.70$

Therefore, the approximate monthly payment needed to pay off the credit card balance over 4 years is $65.70.