Payment=Amount [ i/12(1+i/12)^12t]
________________
[ (1+i/12)^(12t) - 1 ]
Where:
Amount= Loan Amount
i= Interest rate
t= Time,in years
You made a $5000 purchase on your credit card. The statement suggested a minimum monthly payment of $35.00. If the card carries an interest of 10%:
1. How long does it take to pay off this purchase if you only make the minimum payments?
2. How much in interest would you pay?
________________
[ (1+i/12)^(12t) - 1 ]
Where:
Amount= Loan Amount
i= Interest rate
t= Time,in years
You made a $5000 purchase on your credit card. The statement suggested a minimum monthly payment of $35.00. If the card carries an interest of 10%:
1. How long does it take to pay off this purchase if you only make the minimum payments?
2. How much in interest would you pay?
-
there is a flaw in the figures you give
the monthly interest on a $5000 purchase will be 5000*0.1/12 = $41.67
if you pay back only $35/month, you can never repay the loan !
if you paid $45/mth instead, it would take you ≈ 26.14 years,
and the interest you'd pay would be ≈ $9,112.91
the monthly interest on a $5000 purchase will be 5000*0.1/12 = $41.67
if you pay back only $35/month, you can never repay the loan !
if you paid $45/mth instead, it would take you ≈ 26.14 years,
and the interest you'd pay would be ≈ $9,112.91