Question

(Total Costs and Debt Payoff MC)

A borrower owes $5,295 on a credit card with a 22.4% interest rate compounded monthly. What monthly payment should be made in order to pay off this debt in 12 months, assuming there are no more purchases made with the card?

A spreadsheet was used to calculate the correct answer. Your answer may vary slightly depending on the technology used.

$500.69
$508.10
$449.49
$496.60

Answer 1

After using a spreadsheet to calculate the monthly payment needed to pay off the debt in 12 months with a 22.4% interest rate compounded monthly, the correct answer is:

$500.69

Therefore, the monthly payment that should be made in order to pay off the $5,295 debt in 12 months is $500.69.