Joey realizes that he has charged too much on his credit card and has racked up $4,300 in debt. If he can pay $125 each month and the card charges 18 percent APR (compounded monthly), how long will it take him to pay off the debt? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Question
Asked Oct 17, 2019
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Joey realizes that he has charged too much on his credit card and has racked up $4,300 in debt. If he can pay $125 each month and the card charges 18 percent APR (compounded monthly), how long will it take him to pay off the debt? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

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Expert Answer

Step 1

Given that the loan amount is $4300, the payment per month is $125, annual percentage rate is 18%, as the rate is compounded monthly, the monthly rate is 18% divided by 12 (months), that is equal to 1.5%.

Step 2

We can calculate the time period it will take for Joey to pay off the debt using excel.  As the present value is a cash outflow, we have taken it as negative.

Step 3
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