When Beth finishes college, she has a
balance or $2876.37 on a credit card with an annual percentage rate (APR)
or 17.3%. She decides to not make any
additional purchases with her card until
she has paid off the balance.
Assuming the minimum payment is 2% of the balance, find her minimum payment.
I keep getting $575.27.
Can you please help me?
If I am wrong, please show me how to
solve this.
The APR divided/12 is the monthly interest rate, or 17.3/12 =1.442
She pays two percent, so the net payment to the balance is .448 percent.
.02*(2876.37)(1+ 17.3/12)=
Do I say .02 times 2876.37 and how do I
figure the rest? You have me confused.
are you there?
Yes, I am here. I apologize for the confusion. Let's go step by step to calculate the minimum payment and understand the process.
To find the minimum payment, we first need to calculate the interest charged on the balance. The annual percentage rate (APR) is 17.3%, so we divide it by 12 to get the monthly interest rate.
The monthly interest rate = (17.3 / 12) = 1.442%
Next, we calculate the minimum payment as 2% of the balance.
The minimum payment = 0.02 * $2876.37 = $57.53
However, this calculation doesn't consider the interest charged. To include the interest, we need to add the interest to the balance and then calculate 2% of the new amount.
To find the new balance including interest, we use the formula:
New balance = Balance + (Balance * Monthly interest rate)
New balance = $2876.37 + ($2876.37 * 0.01442)
Simplifying this equation gives us:
New balance = $2876.37 + $41.51 = $2917.88
Now we can calculate the minimum payment based on the new balance:
Minimum payment = 0.02 * $2917.88 = $58.36
So, the correct minimum payment is $58.36, not $575.27.
I hope this clarifies the process for you. If you have any further questions, please feel free to ask.