You have 5000 on a credit card that charges a 17 interest ra

You have $5,000 on a credit card that charges a 17% interest rate. If you want to pay off the credit card in 5 years, how much will you need to pay each month (assuming you don\'t charge anything new to the card)?

Solution

Present Value of annuity of 1 = (1-(1+i)^-n)/i where, = (1-(1+0.01417)^-60)/0.01417 i 17%/12 =    0.01417 = 40.233796 n 5*12 = 60 Monthly payment = Balance of credit card/Present Value of annuity of 1 = $       5,000 / 40.233796 = $     124.27 Monthly payment $ 124.27