12
QuizMultiple Choice

Topic Test

Question 12 • FowU - Financial Math - B

Gary has a credit card with an APR of 13.57%, compounded monthly. He would like to pay off the $1,847.42 card balance over the course of two and a half years by making identical monthly payments. Assuming that he makes no additional purchases on his card, how much must Gary pay every month to reach his goal? (Round all dollar values to the nearest cent.)

Answer
A
$72.96
B
$137.45
C
$61.58
D
$86.29

Explanation

Use the monthly loan-payment formula: payment = balance × monthly rate ÷ [1 − (1 + monthly rate)^(−number of payments)]. The monthly rate is 0.1357 ÷ 12 = 0.0113083, and two and a half years is 30 monthly payments. Substituting gives a payment of about $72.96 per month, so the correct choice is $72.96.

AI-written and checked against the verified answer.

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