6
QuizMultiple Choice

Paying Off Debt

Question 6 • Personal Finance - EL3403

Sarah has a credit card balance of $9,450 with an APR of 17%. With her current budgeted payment, Sarah will be able to pay off this debt in 36 months. But Sarah’s best friend just invited her to spend two months in Europe with her in 9 months. Wanting to have her credit card balance paid off before she goes to Europe, Sarah decides to take on a second job. What additional monthly income will Sarah need in order to pay off her credit card in 9 months?

Answer
A
$336.92
B
$467.23
C
$788.85
D
$1125.77

Explanation

Use the monthly interest rate, 17% ÷ 12, and the loan-payment formula. Paying $9,450 off in 36 months requires a monthly payment of about $336.92; paying it off in 9 months requires about $1,125.77. The extra amount needed each month is $1,125.77 − $336.92 = $788.85, so the additional monthly income is $788.85 (choice c).

AI-written and checked against the verified answer.

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