Question

Assume that you have a balance of $9000 on your MasterCard and that you make no more charges. Assume that MasterCard charges 12% APR and that each month you make only the minimum payment of 5% of the balance.

Find how many months it will take to bring the remaining balance down to $400. (Round your answer to the nearest whole number.)

Answer 1

Below is the spreadsheet details - which calculate and show the amount each month being paid. It takes 76 month to bring remaining balance down to $400.

Month	Previous Balance	Minimum payment	Finance Charge (APR)	New Balance
1	9,000.00	450.00	90.00	8640.00
2	8,640.00	432.00	86.40	8294.40
3	8,294.40	414.72	82.94	7962.62
4	7,962.62	398.13	79.63	7644.12
5	7,644.12	382.21	76.44	7338.35
6	7,338.35	366.92	73.38	7044.82
7	7,044.82	352.24	70.45	6763.03
8	6,763.03	338.15	67.63	6492.51
9	6,492.51	324.63	64.93	6232.81
10	6,232.81	311.64	62.33	5983.49
11	5,983.49	299.17	59.83	5744.15
12	5,744.15	287.21	57.44	5514.39
13	5,514.39	275.72	55.14	5293.81
14	5,293.81	264.69	52.94	5082.06
15	5,082.06	254.10	50.82	4878.78
16	4,878.78	243.94	48.79	4683.63
17	4,683.63	234.18	46.84	4496.28
18	4,496.28	224.81	44.96	4316.43
19	4,316.43	215.82	43.16	4143.77
20	4,143.77	207.19	41.44	3978.02
21	3,978.02	198.90	39.78	3818.90
22	3,818.90	190.95	38.19	3666.14
23	3,666.14	183.31	36.66	3519.50
24	3,519.50	175.97	35.19	3378.72
25	3,378.72	168.94	33.79	3243.57
26	3,243.57	162.18	32.44	3113.83
27	3,113.83	155.69	31.14	2989.27
28	2,989.27	149.46	29.89	2869.70
29	2,869.70	143.49	28.70	2754.92
30	2,754.92	137.75	27.55	2644.72
31	2,644.72	132.24	26.45	2538.93
32	2,538.93	126.95	25.39	2437.37
33	2,437.37	121.87	24.37	2339.88
34	2,339.88	116.99	23.40	2246.28
35	2,246.28	112.31	22.46	2156.43
36	2,156.43	107.82	21.56	2070.17
37	2,070.17	103.51	20.70	1987.37
38	1,987.37	99.37	19.87	1907.87
39	1,907.87	95.39	19.08	1831.56
40	1,831.56	91.58	18.32	1758.30
41	1,758.30	87.91	17.58	1687.96
42	1,687.96	84.40	16.88	1620.45
43	1,620.45	81.02	16.20	1555.63
44	1,555.63	77.78	15.56	1493.40
45	1,493.40	74.67	14.93	1433.67
46	1,433.67	71.68	14.34	1376.32
47	1,376.32	68.82	13.76	1321.27
48	1,321.27	66.06	13.21	1268.42
49	1,268.42	63.42	12.68	1217.68
50	1,217.68	60.88	12.18	1168.97
51	1,168.97	58.45	11.69	1122.21
52	1,122.21	56.11	11.22	1077.32
53	1,077.32	53.87	10.77	1034.23
54	1,034.23	51.71	10.34	992.86
55	992.86	49.64	9.93	953.15
56	953.15	47.66	9.53	915.02
57	915.02	45.75	9.15	878.42
58	878.42	43.92	8.78	843.28
59	843.28	42.16	8.43	809.55
60	809.55	40.48	8.10	777.17
61	777.17	38.86	7.77	746.08
62	746.08	37.30	7.46	716.24
63	716.24	35.81	7.16	687.59
64	687.59	34.38	6.88	660.09
65	660.09	33.00	6.60	633.68
66	633.68	31.68	6.34	608.34
67	608.34	30.42	6.08	584.00
68	584.00	29.20	5.84	560.64
69	560.64	28.03	5.61	538.22
70	538.22	26.91	5.38	516.69
71	516.69	25.83	5.17	496.02
72	496.02	24.80	4.96	476.18
73	476.18	23.81	4.76	457.13
74	457.13	22.86	4.57	438.85
75	438.85	21.94	4.39	421.29
76	421.29	21.06	4.21	404.44