document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=1181529>Question 1181529</A>: <I><SPAN STYLE=\"word-break: break-all;\"> You have $2,000 on a credit card that charges a 22% interest rate. If you want to pay off the credit card in four years, how much will you need to pay each month (assuming you don't charge anything new to the card)? </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #849995 by </B><A HREF=/tutors/aboutme.mpl?userid=CPhill><B>CPhill(1987)</B></A><img src=\"/images/stars/stars-12.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=CPhill><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/cgi-bin/show-face.mpl?user=CPhill><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=849995\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> Here's how to calculate the monthly payment you'll need to make to pay off your $2,000 credit card balance in four years with a 22% interest rate:\r<BR>\n" );
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document.write( "**1. Convert the annual interest rate to a monthly rate:**\r<BR>\n" );
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document.write( "*   Monthly interest rate = (Annual interest rate) / 12<BR>\n" );
document.write( "*   Monthly interest rate = 22% / 12 = 0.22 / 12 = 0.018333 (approximately)\r<BR>\n" );
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document.write( "**2. Calculate the number of monthly payments:**\r<BR>\n" );
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document.write( "*   Number of payments = (Number of years) * 12<BR>\n" );
document.write( "*   Number of payments = 4 * 12 = 48\r<BR>\n" );
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document.write( "**3. Use the loan payment formula:**\r<BR>\n" );
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document.write( "The formula to calculate the monthly payment (M) is:\r<BR>\n" );
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document.write( "M = P [ i(1 + i)^n ] / [ (1 + i)^n  -  1]\r<BR>\n" );
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document.write( "Where:\r<BR>\n" );
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document.write( "*   M = Monthly payment<BR>\n" );
document.write( "*   P = Principal balance ($2,000)<BR>\n" );
document.write( "*   i = Monthly interest rate (0.018333)<BR>\n" );
document.write( "*   n = Number of payments (48)\r<BR>\n" );
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document.write( "**4. Plug in the values and calculate:**\r<BR>\n" );
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document.write( "M = 2000 [ 0.018333 (1 + 0.018333)^48 ] / [ (1 + 0.018333)^48  -  1]\r<BR>\n" );
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document.write( "M = 2000 [ 0.018333 (1.018333)^48 ] / [ (1.018333)^48  -  1]\r<BR>\n" );
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document.write( "M = 2000 [ 0.018333 * 2.382769] / [2.382769  -  1]\r<BR>\n" );
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document.write( "M = 2000 [0.043697] / [1.382769]\r<BR>\n" );
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document.write( "M = 2000 * 0.031599\r<BR>\n" );
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document.write( "M ≈ $63.20\r<BR>\n" );
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document.write( "**Therefore, you will need to pay approximately $63.20 each month to pay off your credit card balance in four years.**<BR>\n" );
document.write( " </SPAN>\n" );
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