QuestionJuly 20, 2025

You decide to quit using your credit card and want to pay off the balance of 12,600 in 2 years. Your interest rate is 15.5% compounded monthly. What will your monthly payments be? 614.47 How much interest do you pay? square

You decide to quit using your credit card and want to pay off the balance of 12,600 in 2 years. Your interest rate is 15.5% compounded monthly. What will your monthly payments be? 614.47 How much interest do you pay? square
You decide to quit using your credit card and want to pay off the balance of 12,600 in 2 years. Your
interest rate is 15.5%  compounded monthly.
What will your monthly payments be?
 614.47
How much interest do you pay?
 square

Solution
4.7(245 votes)

Answer

\ 2147.28 Explanation 1. Calculate the monthly interest rate Convert annual interest rate to monthly: r = \frac{15.5\%}{12} = 0.0129167. 2. Determine the number of payments Total payments over 2 years: n = 2 \times 12 = 24. 3. Use the loan payment formula **Loan Payment Formula**: M = \frac{P \cdot r \cdot (1 + r)^n}{(1 + r)^n - 1}, where P = 12600, r = 0.0129167, n = 24. Substitute values: M = \frac{12600 \cdot 0.0129167 \cdot (1 + 0.0129167)^{24}}{(1 + 0.0129167)^{24} - 1}. Calculate M: M = 614.47. 4. Calculate total payment and interest Total payment over 24 months: T = 614.47 \times 24 = 14747.28. Interest paid: I = T - P = 14747.28 - 12600.

Explanation

1. Calculate the monthly interest rate<br /> Convert annual interest rate to monthly: $r = \frac{15.5\%}{12} = 0.0129167$.<br />2. Determine the number of payments<br /> Total payments over 2 years: $n = 2 \times 12 = 24$.<br />3. Use the loan payment formula<br /> **Loan Payment Formula**: $M = \frac{P \cdot r \cdot (1 + r)^n}{(1 + r)^n - 1}$, where $P = 12600$, $r = 0.0129167$, $n = 24$.<br /> Substitute values: $M = \frac{12600 \cdot 0.0129167 \cdot (1 + 0.0129167)^{24}}{(1 + 0.0129167)^{24} - 1}$.<br /> Calculate $M$: $M = 614.47$.<br />4. Calculate total payment and interest<br /> Total payment over 24 months: $T = 614.47 \times 24 = 14747.28$.<br /> Interest paid: $I = T - P = 14747.28 - 12600$.
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