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Rina8888 [55]
3 years ago
8

Jake owes $3,990 on a credit card with an APR of 13.9 percent. How much more will it cost him to pay off this balance if he make

s monthly payments of $50 rather than $60? Assume he does not charge any further purchases.
Business
1 answer:
irakobra [83]3 years ago
7 0

Answer:

$3,545

Explanation:

PV = 3990

APR = .139

PV = $3,990 = $50 × (1 - {1 / [1 + (.139 / 12)]t}) / (.139 / 12)

t = 224.16 months.

PV = $3,990 = $60 × (1 - {1 / [1 + (.139 / 12)]t}) / (.139 / 12)

t = 127.72 months.

Additional cost = (224.16 ×$50) - (127.72 ×$60) = $3,545

It will cost Jake $3,545 to pay off his balance, if he makes monthly payments of $50 rather than $60.

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