Mike has a credit card balance of $30,000. The annual interest rate is 17%. He is required to pay a minimum of 4% of the outstanding balance, but never less than $50. If Mike wants to pay off the balance in 9 years, how much extra must He pay every month?

Mike has a credit card balance of $30,000. The annual interest rate is 17%. He is required to pay a minimum of 4% of the outstanding balance, but never less than $50. If Mike wants to pay off the balance in 9 years, how much extra must He pay every month?

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 19PROB

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Concept explainers

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.

Question

Mike has a credit card balance of $30,000. The annual interest rate is
17%. He is required to pay a minimum of 4% of the outstanding
balance, but never less than $50. If Mike wants to pay off the balance
in 9 years, how much extra must He pay every month?
A:) $25.00
B) 104.05
C) 201.43
D)$134.39

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