Question

A MasterCard statement shows a balance of $510 at 13.2% compounded monthly. What monthly payment will pay off this debt in 1 year 7 months? (Round your answer to the nearest cent.)

Answer 1

EAR = [(1 +stated rate/no. of compounding periods) ^no. of compounding periods - 1]* 100

Effective Annual Rate = ((1+13.2/12*100)^12-1)*100

Effective Annual Rate% = 14.03

	Monthly rate(M)=	yearly rate/12=	1.17%	Monthly payment=	30.09
Month	Beginning balance (A)	Monthly payment	Interest = M*A	Principal paid	Ending balance
1	510.00	30.09	5.96	24.13	485.87
2	485.87	30.09	5.68	24.41	461.46
3	461.46	30.09	5.40	24.69	436.77
4	436.77	30.09	5.11	24.98	411.79
5	411.79	30.09	4.81	25.28	386.51
6	386.51	30.09	4.52	25.57	360.94
7	360.94	30.09	4.22	25.87	335.07
8	335.07	30.09	3.92	26.17	308.90
9	308.90	30.09	3.61	26.48	282.42
10	282.42	30.09	3.30	26.79	255.63
11	255.63	30.09	2.99	27.10	228.53
12	228.53	30.09	2.67	27.42	201.11
13	201.11	30.09	2.35	27.74	173.38
14	173.38	30.09	2.03	28.06	145.31
15	145.31	30.09	1.70	28.39	116.92
16	116.92	30.09	1.37	28.72	88.20
17	88.20	30.09	1.03	29.06	59.14
18	59.14	30.09	0.69	29.40	29.74
19	29.74	30.09	0.35	29.74	0.00