Phoebe realizes that she has charged too much on her credit card and has racked
ID: 2705215 • Letter: P
Question
Phoebe realizes that she has charged too much on her credit card and has racked up $5,500 in debt. If she can pay $250 each month and the card charges 17 percent APR (compounded monthly), how long will it take her to pay off the debt? (Do not round intermediate calculations and round your final answer to 2 decimal places.)
Phoebe realizes that she has charged too much on her credit card and has racked up $5,500 in debt. If she can pay $250 each month and the card charges 17 percent APR (compounded monthly), how long will it take her to pay off the debt? (Do not round intermediate calculations and round your final answer to 2 decimal places.)
Explanation / Answer
Let Time to pay off the debt =n months
Present value of all payments = $5500
5500= 250/(1+17%/12) + 250/(1+17%/12)^2 + 250/(1+17%/12)^3 .........250/(1+17%/12)^n
n = 26.64 months or 27 months