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You have $4,000 on a credit card that charges a 15% interest rate. If you want to pay off the credit card in 5 years, how much will you need to pay each month (assuming you don't charge anything new to the card)?$____each month

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EXPLANATION

Since we have $4,000, and we need to charge a 15% interest rate, we can apply the following relationship:

[tex]A=P\left(1+\frac{r}{12}\right)^{^{12*t}}[/tex]

Plugging in the terms into the equation:

[tex]A=4000\left(1+\frac{0.15}{12}\right)^{12*5}-4000[/tex]

Multiplying terms:

[tex]A=4428[/tex]

Dividing this value into 5 years:

[tex]Monthly\text{ payment=}\frac{4428}{5*12}=73.81[/tex]

In conclusion, we will need to pay $73.81

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