Question

n has been using his credit card too much . His o use only cash until the balance of $8574 e credit card company charges 18% compounded monthly. What is the effec t rate? How much interest will he owe e first month's payment? If he makes monthly is paid off. The car in th payments of $225, how long until it is paid ofl South Florida Contributed by Paul R. McCright, University of

Answer 1

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