Statistics Assume you have a balance of $3200 on your credit card that you want to pay off. Calculate your monthly payment and total payment under the given conditions. Assume you make no...

Statistics

Assume you have a balance of $3200 on your credit card that you want to pay off. Calculate your monthly payment and total payment under the given conditions. Assume you make no additional charges to the card.

The credit card APR is 19% and you want to pay off the balance in 2 years.

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violy | High School Teacher | (Level 1) Associate Educator

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Statistics

Assume you have a balance of $3200 on your credit card that you want to pay off. Calculate your monthly payment and total payment under the given conditions. Assume you make no additional charges to the card.

The credit card APR is 19% and you want to pay off the balance in 2 years.

Answer

  $138.14; $3020.94   $242.74; $5825.73   $193.82; $4234.50   $161.31; $3871.38

For the monthly payment we use the formula:

 

PMT = [ P(r/n )]/[ 1 - (1 + (r/n))^(-nt) ]

where P = loan needed to be pay

          r = APR

          n = number of times of payments per year

          t = number of years 

So, 

PMT = [ 3200(0.19/12) ]/[ 1 - (1 + (.19/12))^(-12*2)]

       = 50.66666666/.3140997355

PMT = $161.307575 or $161.31  <--monthly payment

For the total payments we multiply the monthly payments by 24: 

total payments = 24 * $161.307575 = $3871.3818 or $3871.38 <-- total payment

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