Tabitha opens a credit card in which the minimum payment is 13%. Her current balance is $1,450, not including the finance charge, and the APR is 14.5%. Assuming she makes a payment of $500 this month, how much will the minimum monthly payment be for the next month?
.145/12=.0121
$1450-$500=$950+
.0121*$1450=$17.52
$950+$17.52=$967.52
$967.52*12%= $12578
Minimum Payment
Sorry, that is $125.78
To calculate the minimum monthly payment for the next month, we first need to find the finance charge.
The APR is 14.5%, which means the monthly interest rate is 14.5% divided by 12, or 0.121 (rounded to three decimal places).
Next, we calculate the finance charge by multiplying the current balance ($1,450) by the monthly interest rate (0.121):
$1,450 * 0.121 = $175.45 (rounded to two decimal places)
Now, we subtract the payment made this month ($500) from the current balance ($1,450) to find the remaining balance:
$1,450 - $500 = $950
Finally, we add the finance charge to the remaining balance to obtain the new balance:
$950 + $175.45 = $1,125.45
The minimum monthly payment is calculated by multiplying the new balance by the minimum payment percentage (13%):
$1,125.45 * 0.13 = $146.30 (rounded to two decimal places)
Therefore, the minimum monthly payment for the next month will be $146.30.
To calculate the minimum payment for the next month, we need to follow these steps:
1. Calculate the finance charge for the current balance:
- Divide the annual percentage rate (APR) by 12 to get the monthly interest rate. In this case, 14.5% divided by 12 equals 0.0121.
- Multiply the monthly interest rate by the current balance (excluding the finance charge). In this case, 0.0121 multiplied by $1,450 equals $17.52.
2. Add the finance charge to the current balance:
- Subtract the payment made for this month from the current balance. In this case, $1,450 minus $500 equals $950.
- Add the finance charge to the remaining balance. In this case, $950 plus $17.52 equals $967.52.
3. Calculate the minimum payment amount:
- Multiply the remaining balance by the minimum payment percentage. In this case, 13% of $967.52 equals $125.78.
Therefore, the minimum monthly payment for the next month will be $125.78.