Question

Suppose on Jan.1 you have a balance of 5100.00 on a credit card whose Apr is 18% which you want to pay in 5 years. Assume you don’t make any additional charges after Jan.1. The monthly payment is blank dollars. The total amount paid is blank dollars. The percentage of total paid that is interest is what percent

Answer 1

The percentage of the total paid that is interest is approximately 24.52%.

To calculate the monthly payment, we need to use the formula for calculating the monthly payment on a loan or credit card balance. The formula is:

Monthly Payment = (Balance * (1 + Monthly Interest Rate)^Number of Payments * Monthly Interest Rate) / ((1 + Monthly Interest Rate)^Number of Payments - 1)

Given that the balance is $5100.00 and the APR is 18%, we need to convert the APR to a monthly interest rate. The monthly interest rate is calculated by dividing the APR by 12 months.

Monthly Interest Rate = (APR / 100) / 12

In this case, the monthly interest rate is (18 / 100) / 12 = 0.015 or 1.5%.

Now, we can plug the values into the formula to calculate the monthly payment:

Monthly Payment = (5100 *
`(1 + 0.015)^60` * 0.015) / (
`(1 + 0.015)^60` - 1)

Using a calculator, the monthly payment is approximately $112.64.

To find the total amount paid over 5 years, we multiply the monthly payment by the number of payments:

Total Amount Paid = Monthly Payment * Number of Payments

Total Amount Paid = $112.64 * 60 = $6,758.40

To find the percentage of the total paid that is interest, we need to subtract the original balance from the total amount paid and then divide by the total amount paid:

Interest Paid = Total Amount Paid - Balance

Interest Percentage = (Interest Paid / Total Amount Paid) * 100

Interest Paid = $6,758.40 - $5100.00 = $1,658.40

Interest Percentage = ($1,658.40 / $6,758.40) * 100 = 24.52%

Therefore, the percentage of the total paid that is interest is approximately 24.52%