Interest compounded monthly problem

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Bob's credit card balance is $2000 with a 24% interest rate compounded monthly. To amortize his payments over three years, he would need to pay approximately $78.47 monthly. If he only pays the minimum of $25 per month, his debt after three years would grow significantly due to insufficient payments against the interest, resulting in a total debt of about $2779.92. The calculations involve using the formula for compound interest and adjusting for monthly payments. The discussion emphasizes the importance of understanding the equations for both scenarios to manage credit card debt effectively.
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Hi again!

Bob's credit card balance is $2000. Credit company charges 24% interest compounded monthly.

1) Amortize monthly payments to pay off in 3 years
I'm not sure how to write the equations on the board, but I get $78.47

2) If Bob only pays $25 monthly minimum, what will his debt be in 3 years?
No ideas...
 
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CountNumberla said:
Hi again!

Bob's credit card balance is $2000. Credit company charges 24% interest compounded monthly.

1) Amortize monthly payments to pay off in 3 years
I'm not sure how to write the equations on the board, but I get $78.47

2) If Bob only pays $25 monthly minimum, what will his debt be in 3 years?
No ideas...

You need to show us the equations you used to work out part 1. We do not do your homework for you here on the PF.

What are the Relevant Equations for this type of calculation. The Homework Help Template that you deleted in making your post ask for them.
 


I understand, if you see my other post, I AM doing the work myself.

Here's the equation I used:

2000(1 + .24/12)^36 = X [(1 + .24/12)^36 - 1] / (.24/12)

Im not sure what other equations to use for the 2nd problem.

thanks!
 


CountNumberla said:
I understand, if you see my other post, I AM doing the work myself.

Here's the equation I used:

2000(1 + .24/12)^36 = X [(1 + .24/12)^36 - 1] / (.24/12)

Im not sure what other equations to use for the 2nd problem.

thanks!

Yes, I did check your other post after seeing this one. Thanks for posting your work on #1. It seems like #2 is a similar extension of the same technique, but he is just not paying off enough to pay it down. Can you take a cut at an equation for #2?
 


I got it thanks!

2000(1 + .24/12)^36 = $4079.77

25[(1 + .24/12)^36 - 1] / (.24/12) = $1299.86

Therefore 4079.77 - 1299.86 = $2779.92

correct?
 

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