SOLUTION: You have $2,500 on a credit card that charges a 17% interest rate. If you want to pay off the credit card in 4 years, how much will you need to pay each month( assuming you don’t

Algebra ->  Finance -> SOLUTION: You have $2,500 on a credit card that charges a 17% interest rate. If you want to pay off the credit card in 4 years, how much will you need to pay each month( assuming you don’t      Log On


   

Question 1207204: You have $2,500 on a credit card that charges a 17% interest rate. If you want to pay off the credit card in 4 years, how much will you need to pay each month( assuming you don’t charge anything new to the card)?
Found 2 solutions by MathLover1, math_tutor2020:
Answer by MathLover1(20850) About Me  (Show Source):
You can put this solution on YOUR website!

given:
present value+P=2500
desired future value FV=0
interest rate r=17%=0.17
n=4 years
m=12 months

find monthly payment M using formula:

M=P%28r%2Fm%29%2F%281-%281%2Br%2Fm%29%5E%28-m%2An%29%29
M=2500%280.17%2F12%29%2F%281-%281%2B0.17%2F12%29%5E%28-12%2A4%29%29
M=72.14
You must make monthly payments of $72.14 to pay off your credit card balance of $2500 in 48 months or 4 years.
This assumes you do not make any additional charges during this period and make your payments on time.

Answer by math_tutor2020(3817) About Me  (Show Source):
You can put this solution on YOUR website!

Answer: $72.14

Work Shown

Monthly payment formula
P = (L*i)/(1 - (1+i)^(-n))
where,
P = monthly payment
L = loan amount
i = interest rate per month
n = number of months

In this case
L = 2500
i = 0.17/12
n = 4*12 = 48

Let's determine the monthly payment
P = (L*i)/(1 - (1+i)^(-n))
P = (2500*0.17/12)/(1 - (1+0.17/12)^(-48))
P = 72.137605768506
P = 72.14

You can use an online calculator such as this to confirm.
https://www.calculatorsoup.com/calculators/financial/loan-calculator.php