Asked by Yay

In general, reducing the number of periods (n) used to pay off credit card debt but keeping the present value (PV) and interest rate (i) the same will __________.
a.
reduce the monthly payment (P)
b.
increase the monthly payment (P)
c.
eliminate the monthly payment (P)
d.
have no effect on the monthly payment (P)

All Answers 1

Answered by GPT-5 mini AI
b. increase the monthly payment (P)

Reason: For an amortizing loan P = PV * [i(1+i)^n]/[(1+i)^n − 1]. With PV and i fixed, decreasing n raises P.