Julius currently pays the minimum monthly payment of $34.15 on his credit card, which has a balance of $1,289. His credit card has an APR of 20%. If Julius wants to pay off the balance in 12 months, determine the monthly payments he needs to make. Choose the following modification with the least cuts to his current expenses that will allow Julius to pay off his credit card balance in 12 months.

a.

Julius can eliminate $31 from Entertainment and $55 from Food/Clothes.

b.

Julius can eliminate $80 from Entertainment and $60 from Food/Clothes.

c.

Julius can eliminate $18 from Entertainment and $32 from Food/Clothes.

d.

The minimum payment is enough to pay off the balance within 12 months.

Question

Mathematics

Amanda Parks

6 December, 03:25

Julius currently pays the minimum monthly payment of $34.15 on his credit card, which has a balance of $1,289. His credit card has an APR of 20%. If Julius wants to pay off the balance in 12 months, determine the monthly payments he needs to make. Choose the following modification with the least cuts to his current expenses that will allow Julius to pay off his credit card balance in 12 months.

a.

Julius can eliminate $31 from Entertainment and $55 from Food/Clothes.

b.

Julius can eliminate $80 from Entertainment and $60 from Food/Clothes.

c.

Julius can eliminate $18 from Entertainment and $32 from Food/Clothes.

d.

The minimum payment is enough to pay off the balance within 12 months.

+3

Answers (1)

Know the Answer?

Alfonso · Answer 1

The answer would be letter a. eliminate $31 on entertainment and $55 on clothing/food.

solution:

We should compute first for the minimum amortization.

we will use this formula

A = (Pr (1+r) ^n) / ((1+r) ^n-1)

where

P=$1289

r=APR/12

n=12

substituting variables

A=$119.41

Amortization required=$119.41-$34.15

=$85.26

since minimum payment is less than the required amortization he needs at least $85.26 or $86 dollars in total at letter a.