Finding the time necessary until you pay off a loan is simple if you make equal payments
Question:
Finding the time necessary until you pay off a loan is simple if you make equal payments each month. However, when paying off credit cards many individuals only make the minimum monthly payment, which is generally 2% to 3% of the balance or $10 whichever is greater. Locate the credit card calculator at www.fincalc.com and work out this exercise:
You currently owe $10,000 on a credit card with a 17% interest rate and a minimum payment of $10 or 2% of your balance.
- How soon will you pay off this debt if you make the minimum payment each month?
- How much total interest will you pay using that method?
- Calculate how soon you would pay off this debt if you paid $100 per monthly payment.
Essentials of Corporate Finance
ISBN: 9780073382463
7th edition
Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan