Question 1181529
.
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)?
~~~~~~~~~~~~~~~~~~~~~~~~~


<pre>
It is the same as if you took a loan of $2000, and you want to pay it off 
in 4 years at 22% annual interest rate compounded montly.


Use the formula for the monthly payment for a loan

    M = {{{L*(r/(1-(1+r)^(-n)))}}}


where L is the loan amount; r = {{{0.22/12}}} is the effective interest rate per month;
n is the number of payments (same as the number of months in 4 years); M is the monthly payment.


In this problem  L = $2000;  r = {{{0.1/12}}};  n = 4*12 = 48.


Substitute these values into the formula and get for monthly payment

    M = {{{2000*(((0.22/12))/(1-(1+0.22/12)^(-48)))}}} = $63.01  (rounded).


Thus, the monthly payment is $63.01.    <U>ANSWER</U>
</pre>

Solved.