Question

Assume you have a credit card that has an interest rate of 24% APR, compounded monthly....

Assume you have a credit card that has an interest rate of 24% APR, compounded monthly. Assume you have a credit balance of
$5,000. What would your monthly payment need to be to pay off the balance in 3 years?

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Answer #1

Duration of loan=n=3*12=36 months

Rate of interest=i=24%/12=2% per month

Loan amount=PV=$5000

Monthly payment=PV*(A/P,0.02,36)=5000*(A/P,0.02,36)

Let us calculate the interest factor

Monthly payment=5000*0.03923285=$196.16

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