Johann owes $9,889 on a credit card with a 23.5% interest rate. What is the monthly payment he should make to pay off this debt in 12 months, assuming he does not charge any more purchases with the card?

Question

tkhunny · Answer

When will Johann start paying?  Immediately?  Next Month?

What is the official interest rate method?  There are about a thousand different ways to calculate the interest.  We can just pick an easy one if the problem staatement offers nothing.

anonymous · Answer

It doesn't state when or which method.. but these are the choices..

$824.08

 $932.71

 $206.30

 $2,524.44

tkhunny · Answer

Okay, then one more thing.  What are you studying?  Do you have a Present Value formula?

anonymous · Answer

Its advance algebra with finanical applications.. in the lesson, debt (pay it off ) it's about credit, etc.

anonymous · Answer

I can't seem to find the formula either.. thats why I dont knwo the answer

tkhunny · Answer

That's annoyingly ambiguous.  Well, okay, let's start with a quick estimate:

23.5% is annual, so monthly is about 2%. right?  It's a little less than that, but we're only estimating.

anonymous · Answer

Yes, thats sounds about right

tkhunny · Answer

Okay, then we'll have to pay more than about $10000*0.02 = $200 JUST for interest in the first month!  How are we doing so far?

anonymous · Answer

Do you have the answers?