31
QuizMultiple Choice

Using Credit

Question 31 • 26-27 Ignite Technical Math-Financial Math - MA2007

Jeff has a balance of $2,513.77 on his credit card. He would like to pay off his card over the course of a year and a half by making identical monthly payments. The APR on his card is 10.66%, compounded monthly. Assuming that Jeff makes no additional purchases with his card, how much will he have to pay every month to reach his goal? (Round all dollar values to the nearest cent.)

Answer
A
$151.73
B
$162.57
C
$139.65
D
$147.64

Explanation

Use the monthly payment formula for paying off a balance: payment = balance × monthly rate ÷ [1 − (1 + monthly rate)^−number of payments]. The monthly rate is 0.1066 ÷ 12, and a year and a half is 18 monthly payments. Substituting $2,513.77 gives a payment of about $151.73 per month, so the correct choice is $151.73.

AI-written and checked against the verified answer.