Yvonne bought a new computer and printer for college. The total cost was $2500, which she put on her new credit card that has an interest rate of 13.5%. She makes a $75.00 monthly payment. How many months will it take to pay off the credit card balance?
I tried plugging it into a calculator and a formula, still not sure what im doing wrong. Plz help, thank you.
so what formula are you using?
N = -log( 1- ( 13.5 / 12 ) (2,000 / 150 ))
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log ( 1+ ( 13.5 / 12 ))
Whoops total different numbers..
To calculate the number of months it will take to pay off the credit card balance, you need to consider the monthly payment, the interest rate, and the total cost. Here's how you can solve this problem:
1. Calculate the interest charged each month:
- Convert the interest rate from a percentage to a decimal by dividing it by 100: 13.5% / 100 = 0.135.
- Multiply the total cost by the interest rate to find the monthly interest charge: $2500 * 0.135 = $337.50.
2. Determine the remaining balance after each monthly payment:
- Subtract the monthly payment from the total cost: $2500 - $75 = $2425.
- Add the monthly interest charge to the remaining balance: $2425 + $337.50 = $2762.50.
- Repeat this process for subsequent months until the remaining balance is zero or below.
3. Divide the remaining balance by the monthly payment to find the number of months:
- Divide the remaining balance after each monthly payment by the monthly payment: $2762.50 / $75 = 36.83 (rounded to two decimal places).
Therefore, it will take approximately 36.83 months (or about 37 months) to pay off the credit card balance.
If you're still having difficulty with your calculations, I recommend double-checking your calculations and using a calculator with accurate decimal places to avoid any rounding errors.