15
QuizMultiple Choice

Paying Off Debt

Question 15 • Personal Finance - EL3403

Frank has four different credit cards, the balances and interest information of which are outlined in the table below. He would like to consolidate his credit cards to a single credit card with an APR of 18% and pay off the balance in 24 months. What will his monthly credit card payment be?Credit CardBalanceAPRA$2,380 19%B$4,500 15%C$1,580 17.50%D$900 21%

Answer
A
$390.00
B
$462.91
C
$467.29
D
$52.00

Explanation

Add the four balances to get a total of $9,360. The monthly interest rate is 18% ÷ 12 = 1.5%, and the balance is paid over 24 months. Using the fixed-payment formula, $9,360 × 0.015 ÷ [1 − (1.015)^−24] ≈ $467.29 per month, so the payment is $467.29.

AI-written and checked against the verified answer.

Previous
Next