You receive your monthly invoice from your bank for your credit card account

Finance Aug 04, 2020

You receive your monthly invoice from your bank for your credit card account. Your balance is $809.05 and your bank offers you the option of paying it at the rate of $27 per month at an annual interest rate of 14.74%. How many months will you need to pay off your balance assuming that you make no more purchases with this card until then?

Expert Solution

Computation of months by using nper function in excel:-

=nper(rate, pmt, -pv, -fv)

Here, rate = 14.74% / 12

pmt = $27

pv ( present value ) = $809.05

fv = 0

=nper( (14.74%/12) , 27, -809.05 , 0)

= 37.59454

37.60 months will required to pay off the balance

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