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    Calculating period needed to clear off a credit

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    You charged $1,000 on your credit card for Christmas presents. Your credit card company charges you 16% annual interest, compounded monthly. If you make the minimum payments of $25 per month, how long will it take ( to the nearest month) to pay off your balance?

    a.111 months
    b.58 months
    c.46 months
    d.40 months

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    Solution Preview


    Rate of interest = 16% p.a.
    Rate of interest per month=i=16/12=1.333333%

    Monthly ...

    Solution Summary

    The solution describes the steps for calculating loan period based upon minimum monthly payment.