Your credit card has a balance of $4100 and an annual interest rate of 13%, You

Question

Your credit card has a balance of $4100 and an annual interest rate of 13%, You decide to pay off the balance over four years. If there are no further purchases charged to the card, you must pay $110.02 each month pay a total interest of $1180.96. Assume you decide to pay off the balance over one year rather than four. How much more must you pay each month and how much less will you pay in total interest? and you will Use PMT nt to determine the regular payment amount - 03 You will pay $more each month. Round to the nearest cent as needed.) You will pay $-less in total interest Round to the nearest cent as needed) Enter your answer in each of the answer boxes.

Explanation / Answer

PMT = P * (r/n) /( 1- (1+r/n))^(-n*t)

where P = 4100

r = 13%

n = 12

t = 1 year

PMT = 4100 * (13%/12) /( 1 - (1 + 13%/12)^(-12*1))

= $366.20

You will pay $256.18 more each month. (366.2 - 110.02)

Total payment in one year = $366.2 * 12 = $4394.41

Total interest payment = $4394.41 - $4100 = $294.41

You will pay $886.55 less in total interest. (1180.96 - 294.41)

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