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Question 1032194: The annual interest rate on a credit card is 13.99%. If the minimum payment of $20 is made each month, how many months will it take to pay off an unpaid balance of $901.42? Assume that no new purchases are made on the credit card.
Please show me how to work it out AND the answer if possible. Thank you so much.
Answer by pphantom(4)   (Show Source):
You can put this solution on YOUR website! Where N is the number of monthly payments, i is the decimal interest rate per MONTH, A is the amount owed, and P is the payment amount.
N = -LOG(1-iA/P)/LOG(1+i)
i = 13.99% per year/100/12 months per year = .011658
A = $901.42
P = $20
N - -LOG(1-.011658*901.42/20) / LOG(1+.011658)
N = 64 months
Credit goes to http://brownmath.com/bsci/loan.htm#LoanNumber for the complete explanation and the basic formulas. I just had to figure out what they were using for i and put your numbers into it.
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