You have a balance of $500 on your credit card and make no more charges. Assume the card carries an APR of 19%. Suppose you want to pay off the card in six months by making equal payments each month. What is your monthly payment?

Question

Quizplus · Accepted Answer

To find the monthly payment, we use the formula for an amortizing loan: P = [r*PV] / [1 - (1 + r)^-n], where P is the monthly payment, r is the monthly interest rate (APR/12), PV is the present value or balance, and n is the number of payments. Here, r = 0.19/12, PV = $500, and n = 6. Solving gives approximately $88.01.

You Have a Balance of $500 on Your Credit Card