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Read the short scenario and answer the question that follows.
​Lisa's credit card balance this month is​ $969.16. Her APR​ (annual percentage​ rate) is 15.24​ %. The minimum payment due is​ $20.00.
If she pays only the minimum each month and does not add any more​ charges, how long will it take her to pay off the entire​ balance?
Choose the correct answer below.
A.
about 10 years
B.
about 6 years
C.
about 3 years
D.
about 1 year

Respuesta :

Answer 6 years. Explanation if lisa only pays $20 minimum monthly payment, it would take her 76 months just to get done with her payment

Answer:

B

Step-by-step explanation:

Use the amortisation formula:

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

swap in your numbers

p = 969.16

A = 20

n = 0.1524/12

20 = 969.16((0.1524/12) (1+(0.1524/12))^n) / ((1+(0.1524/12))^n - 1)

Then solve for n

n = 72 months

n = 6 years

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