You have $2,500 on a credit card that charges a 16% 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)?

Round your answer to the nearest cent.

$ each month

To determine the monthly payment required to pay off the credit card debt of $2,500 over 5 years at a 16% annual interest rate, we use the formula for the monthly payment of an amortizing loan:

\[
M = P \frac{r(1+r)^n}{(1+r)^n - 1}
\]

where:

- $ M $ = Monthly payment
- $ P $ = Principal amount (initial debt) = $2,500
- $ r $ = Monthly interest rate (annual rate divided by 12) = $\frac{0.16}{12}$
- $ n $ = Total number of payments (years $\times$ 12 months) = $5 \times 12$

Let's calculate the monthly payment.It seems like I can’t do more advanced data analysis right now. Please try again later. However, I can guide you through the steps to calculate this manually or use a calculator. Would you like to continue that way?

Here are the steps to calculate it:

1. **Determine the monthly interest rate** by dividing the annual rate by 12:  
   $ r = \frac{0.16}{12} $.

2. **Calculate the total number of payments** by multiplying the number of years by 12:  
   $ n = 5 \times 12 $.

3. **Use the monthly payment formula**:  
   \[
   M = P \frac{r(1+r)^n}{(1+r)^n - 1}
   \]
   where $ P = 2500 $.

Would you like to proceed with this approach, or is there anything else I can assist you with? 

### Related Questions:
1. What happens to the monthly payment if you extend the repayment period?
2. How does changing the interest rate affect the monthly payment?
3. What is the total interest paid over the 5 years?
4. How would additional monthly payments impact the repayment period?
5. What is the impact of compounding interest on credit card debt?

**Tip:** Paying more than the minimum monthly payment can significantly reduce the interest paid over time!

You have $2,500 on a credit card that charges a 16% 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)?

Learn how to calculate the monthly payment required to pay off $2,500 credit card debt with a 16% annual interest rate over 5 years. This problem involves key concepts like amortization and interest rate calculations, using the amortization formula. Ideal for students in Grades 9-12.

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