you have a $5841 credit card debt, and you plan to pay it off through monthly payments of $71. if you are being charged 14% interest per year, how long will it take you to repay your debt?
Ouch!
You better increase that payment.
i = .14/12 = .0116667
let the time be n months
5841 = 71 (1 - 1.0116667^-n)/.0116667
68.145 =71(1 - 1.0116667^-n)
.9597887 = 1 - 1.0116667^-n
1.0116667^-n = .040211267
-n = log .040211267 / log 1.0116667 = 277 months
or 23 years.
Keep in mind that the interest the first month would be
5841(.0116667) or $68.14
so if you are only paying $71, you are paying off less than $3 off per month at the start.
So in the first year of paying 71 x 12 or $852 in payments, you would have reduced your entire debt by only about $36
depressing , isn't it ????
wow! sure is. thanks so much sir! :]
To calculate how long it will take to repay the credit card debt, we'll need to consider the monthly payment, interest rate, and the initial debt amount.
First, let's analyze the monthly payment of $71. Each month, you'll be paying $71 towards the debt.
Next, we need to determine the interest rate per month. Since the annual interest rate is 14%, we divide it by 12 (months), resulting in a monthly interest rate of approximately 1.17%.
To calculate the time it will take to repay the debt, we can use a formula called the "debt repayment formula." It is derived from the compound interest formula and can be written as:
LoanAmount = MonthlyPayment * ((1 - (1 + MonthlyInterestRate) ^ -n) / MonthlyInterestRate)
Where:
- LoanAmount is the initial debt amount ($5841),
- MonthlyPayment is the amount you'll be paying each month ($71),
- MonthlyInterestRate is the monthly interest rate (1.17% or 0.0117 in decimal form),
- n is the number of months it will take to repay the debt.
Rearranging the formula to solve for n gives us:
n = -log(1 - (LoanAmount * MonthlyInterestRate) / MonthlyPayment) / log(1 + MonthlyInterestRate)
Using this formula, we can now calculate the value of n, which represents the number of months it will take to repay the debt.
Plugging in the given values:
n = -log(1 - (5841 * 0.0117) / 71) / log(1 + 0.0117)
Evaluating this expression, we find that it will take approximately 106 months to repay the debt.
Therefore, it will take you around 106 months (or approximately 8 years and 10 months) to fully repay the $5841 credit card debt if you make monthly payments of $71 and are being charged a 14% annual interest rate.