The annual interest rate on a credit card is14.99 %. If a payment of 400$ is made each month, how many months will it take to pay off an unpaid balance of 2385.82 $? Assume that no new purchases are made with the credit card.
To find out how many months it will take to pay off the unpaid balance, we need to divide the unpaid balance by the monthly payment.
The monthly payment is $400.
So, we have:
2385.82 / 400 = 5.96455
Since we can't have a fraction of a month, we need to round up to the nearest whole number.
Therefore, it will take 6 months to pay off the unpaid balance.
To calculate the number of months it will take to pay off the unpaid balance, we need to consider the monthly payment and the interest rate on the credit card.
Step 1: Calculate the monthly interest rate.
Divide the annual interest rate by 12 (the number of months in a year): 14.99% / 12 = 1.25% (expressed as a decimal: 0.0125).
Step 2: Calculate the amount of the monthly interest payment.
Multiply the unpaid balance by the monthly interest rate: 2385.82 * 0.0125 = 29.82.
Step 3: Calculate the amount of the monthly principal payment.
Subtract the monthly interest payment from the monthly payment: 400 - 29.82 = 370.18.
Step 4: Calculate the number of months it will take to pay off the balance.
Divide the unpaid balance by the monthly principal payment: 2385.82 / 370.18 ≈ 6.44.
Since we cannot have a fraction of months, we round up to the nearest whole month.
Answer: It will take approximately 7 months to pay off the unpaid balance.
To find out how many months it will take to pay off an unpaid balance on a credit card, we need to consider the monthly payments and the interest rate. Here's how to calculate it:
Step 1: Convert the annual interest rate to a monthly interest rate.
The annual interest rate is 14.99%. To convert it to a monthly interest rate, divide it by 12 months:
Monthly interest rate = 14.99% / 12 = 1.2492%
Step 2: Calculate the monthly interest charge.
Multiply the monthly interest rate by the unpaid balance:
Monthly interest charge = 1.2492% * $2385.82 = $29.80 (rounded to the nearest cent)
Step 3: Calculate the total payment made each month.
The total payment made each month is the sum of the monthly payment and the monthly interest charge:
Total payment = Monthly payment + Monthly interest charge
Total payment = $400 + $29.80 = $429.80
Step 4: Calculate the number of months to pay off the balance.
Divide the unpaid balance by the total payment made each month and round up to the nearest whole number:
Number of months = $2385.82 / $429.80 = 5.55 (rounded up to 6 months)
Therefore, it will take approximately 6 months to pay off the unpaid balance of $2385.82 by making monthly payments of $400, assuming no new purchases are made with the credit card.