21
QuizMultiple Choice

The Cost of Credit

Question 21 • 2027 Ignite Financial Literacy-Personal Finance - EL3403

The table shows a schedule of Mr. Kirov’s plan for paying off his credit card balance.Mr. Kirov’s Payment Plan BalancePaymentNew Balance RateInterest$800.00$100$700.000.012$8.40$708.40$100$608.400.012$7.30$615.70$100$515.700.012$6.19If Mr. Kirov continues to make monthly payments of $100 and does not make any new purchases, how many more payments will he need to make before the balance is 0?

Answer
4
4 payments
5
5 payments
6
6 payments
7
7 payments

Explanation

After the third payment and interest, the balance is $515.70 + $6.19 = $521.89. Each month, subtract the $100 payment and then add 1.2% interest; after five more months, the balance is still about $35.67. A sixth payment will clear it, so the correct choice is 6 payments.

AI-written and checked against the verified answer.

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