Question

You have a $10,000 balance on your credit card, which has an effective monthly interest rate of 2%. How many months will it take you to pay off the balance by making monthly payments of $600?

Answer 1

Answer : Calculation of Number of Months :

Number of Months can be calculated using NPER function of Excel

=NPER(rate,pmt,pv,fv)

where

rate is the effective rate of interest per period i.e 2%

pmt is the periodic payment i.e 600

pv is the balance in credit card i.e 10000

fv is future value i.e 0

=NPER(2%,600,-10000,0)

The number of Months is 20.475 months or 20.48 months