Due to poor spending habits, Ricky has accumulated $10,000 in credit card debt. He has missed several payments and now the annual interest rate on the card is 18.95%! If he pays $175 per month on the card, how long will it take Ricky to pay off the card?
A) 121.5 months
B) 148.50 months
C) 162.5 months
D) Ricky never pays off the carD.PV = 10000; PMT = -175; i = 18.95/12; FV = 0; = n = 148.50

Question

Due to poor spending habits, Ricky has accumulated $10,000 in credit card debt. He has missed several payments and now the annual interest rate on the card is 18.95%! If he pays $175 per month on the card, how long will it take Ricky to pay off the card?
A) 121.5 months
B) 148.50 months
C) 162.5 months
D) Ricky never pays off the carD.PV = 10000; PMT = -175; i = 18.95/12; FV = 0; = > n = 148.50

Quizplus · Accepted Answer

Using the formula PV = PMT [(1-(1+i)^-n)/i], where PV is the present value (debt), PMT is the monthly payment, i is the monthly interest rate (18.95% divided by 12), and n is the number of months, we can solve for n. Plugging in the values, we get n = 148.50 months, which is the closest to the given answer choices. Therefore, choice B is the correct answer.

Due to Poor Spending Habits, Ricky Has Accumulated $10,000 in Credit