https://file.aiquickdraw.com/mathbot/file/1729783480153auzhwryn.jpg

The problem in the image asks to calculate the balance after 40 months on a credit card, assuming a balance of $3,700, an APR of 22.8%, and minimum payments of 5% of the balance each month. Here's how to approach the problem:

### Step 1: Convert APR to monthly interest rate.
The APR is 22.8%, so the monthly interest rate is:
\[
\text{Monthly interest rate} = \frac{22.8\%}{12} = 1.9\% = 0.019
\]

### Step 2: Understand the payment calculation.
Each month, you make a minimum payment of 5% of the current balance. However, because interest is applied, part of the payment goes toward interest, and the rest goes toward reducing the principal.

The new balance for each month can be calculated as:
\[
\text{New balance} = (\text{Current balance} \times (1 + \text{monthly interest rate})) - (\text{Current balance} \times 0.05)
\]
Where:
- $1.9\%$ is added due to interest.
- $5\%$ of the balance is paid off each month.

### Step 3: Repeat for 40 months.
To calculate the balance after 40 months, we would apply this process iteratively over 40 periods.

Would you like me to compute this step-by-step in detail to find the final balance?

Assume that you have a balance of $3,700 on your credit card and that you make no more charges. Your credit card company charges 22.8% APR and you will only make the minimum payment of 5% of the balance each month. What will the balance be after 40 months? Round your answer to the nearest cent.

This problem asks how to calculate the remaining balance on a $3,700 credit card debt with 22.8% APR after 40 months, assuming a 5% minimum payment is made each month. Learn to apply compound interest formulas and balance reduction methods.

Math Problem Statement

Solution

Ask a new question for Free

By Image

Math Problem Analysis

Mathematical Concepts

Formulas

Theorems

Suitable Grade Level

Related Recommendation