Question

June has a credit card balance of $4,350 that comes with a 19% APR. She would like to have the balance paid off in the next 8 months, but she is having trouble making the monthly payments required to do so. In order to lower her monthly payments, she decides to sell her porcelain doll collection for $2,000 to apply directly to her credit card balance. June still wants to pay off the balance in 8 months. By applying the doll money, how much has June lowered her minimum monthly payment?
a. $145.62

b. $268.14

c. $315.06

d. $583.20

Answer 1

Answer:

b. $268.14

Step-by-step explanation:

Original credit card monthly payment =

$p(\frac{i(1+i)^{n} }{(1+i)^{n}-1 } )$

where 

Principal= $4350

i= 19/12/100=0.01583

n= 8

Putting the values in formula we get:

$4350(\frac{0.01583(1+0.01583)^{8} }{(1+0.01583)^{8}-1 } )$

We get A1= $583.19

Now, she paid $2000 making new principle = $2350

i and n are same.

$2350(\frac{0.01583(1+0.01583)^{8} }{(1+0.01583)^{8}-1 } )$

We get A2=315.06

Difference between A1 and A2=  $583.19-315.06=268.13$

Therefore, June lowered her minimum monthly payment by $268.13 close to option B.

Hence, option B is correct.

Answer 2

It's B on E2020, I just took the test.