Calvin Johnson has a ​$6,000 debt balance on his Visa card that charges 11.1 percent APR compounded monthly. In​ 2009, Calvin's minimum monthly payment is 4 percent of his debt​ balance, which is ​$240. How many months​ (round up) will it take Calvin Johnson to pay off his credit card if he pays the current minimum payment of $240 at the end of each​ month? In​ 2010, as the result of a federal​ mandate, the minimum monthly payment on credit cards rose to 5 percent. If Calvin made monthly payments of ​$300 at the end of each​ month, how long would it take to pay off his credit​ card?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Calvin Johnson has a

​$6,000

debt balance on his Visa card that charges

11.1

percent APR compounded monthly. In​ 2009, Calvin's minimum monthly payment is

4

percent of his debt​ balance, which is

​$240.

How many months​ (round up) will it take Calvin Johnson to pay off his credit card if he pays the current minimum payment of

$240

at the end of each​ month? In​ 2010, as the result of a federal​ mandate, the minimum monthly payment on credit cards rose to

5

percent. If Calvin made monthly payments of

​$300

at the end of each​ month, how long would it take to pay off his credit​ card? 

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