The annual interest rate on a credit card is 1299 If a payme

The annual interest rate on a credit card is 12.99%. If a payment of $200.00 is made each month, how many months will it take to pay off an unpaid balance of $2,372.69?

Assume that no new purchases are made with the credit card.

Solution

annual interest rate = 12.99%

monthly interest rate = 12.99/12 = 1.0825 %

P = r* PV / ( 1 - (1+r)^-n )

200 = .010825 * 2372.69 / ( 1 - ( 1.010825)^-n )

200 ( 1 - ( 1.010825)^-n ) = 25.684369

( 1 - ( 1.010825)^-n ) = .128422

- ( 1.010825)^-n = -0.8716

( 1.010825)^-n = 0.8716

n = 12.76

so , it will take approxiomately 13 months to pay off unpaid balance