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Use PMT=to determine the regular payment amount, rounded to the nearest dollar Your credit card has a balance of $4700 and an annual interest rate of 12% You decide to pay off the balance-M]over two years. If there are no further purchases charged to the card,a. How much must you pay each month?b. How much total interest will you pay?a. The monthly payments are approximately $(Do not round until the final answer. Then round to the nearest dollar as needed.)b. The total interest paid over 2 years is approximately $(Round to the nearest dollar as needed)

Sagot :

Given

Credit card has a balance of $4700

An annual interest rate of 12%

Find

a) How much must you pay each month?

b) How much total interest will you pay?

Explanation

a) Here we use PMT ,

[tex]\frac{P\times(\frac{r}{n})}{1-(1+\frac{r}{n})^{-n\times t}}[/tex]

here P = $4700

r = 12%

now , substitute the values ,

[tex]\begin{gathered} \frac{4700\times(\frac{12\%}{12})}{[1-(1+\frac{12\%}{12})^{-12\times2}]} \\ \\ \frac{4700\times(1\%)}{[1-(1+1\%)^{-24}]} \\ \\ \frac{47}{1-0.78756613} \\ \\ \frac{47}{0.21243387} \\ \\ 221.245322132\approx221.25 \end{gathered}[/tex]

b) Total interest paid over 2 years = (monthly payment * total number of months in a year*time period ) - current balance of credit card

so ,

[tex]\begin{gathered} 221.25\times12\times2-4700 \\ 5310-4700 \\ 610 \end{gathered}[/tex]

Final Answer

Hence ,

a) The monthly payments are approximately $ 221.25

b) The total interest paid over 2 years is $610

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