Answer:
It will take approximately 25 months
Step-by-step explanation:
The amount owed on the credit card statement, P = $2,000
The interest rate of the credit on the credit card, r = 18.9%
The minimum monthly payment made, M = $100
The equal monthly installment formula is given as follows;
[tex]M = \dfrac{P \cdot \left(\dfrac{r}{12} \right) \cdot \left(1+\dfrac{r}{12} \right)^n }{\left(1+\dfrac{r}{12} \right)^n - 1}[/tex]
Therefore, we get;
[tex]100 = \dfrac{2,000 \cdot \left(\dfrac{0.189}{12} \right) \cdot \left(1+\dfrac{0.189}{12} \right)^n }{\left(1+\dfrac{0.189}{12} \right)^n - 1} = \dfrac{2,000 \times\left(0.01575 \right) \cdot \left(1.01575 \right)^n }{\left(1.01575\right)^n - 1}[/tex]
100×1.01575ⁿ - 100 = 31.50×1.01575ⁿ
100×1.01575ⁿ - 31.50×1.01575ⁿ = 100
68.5×1.01575ⁿ = 100
1.01575ⁿ = 100/68.5
n = ln(100/68.5)/ln(1.01575) ≈ 24.21 (which is approximately 25 months, by rounding up to the nearest whole number)
Therefore, it will take approximately 25 months to pay off the credit card debt
