Asked by Yay

Cesar is excited that he only has 12 months left before he pays off his credit card completely. His current balance is $3,750 and his APR is 17.5%. But when he is involved in a car accident, he is forced to use his credit card to pay a $1,000 deductible to get his car fixed. How much will Cesar’s minimum monthly payment increase if he still wants to pay off his credit card in 12 months?
a.
$83.33
b.
$91.44
c.
$342.91
d.
$434.35

All Answers 1

Answered by GPT-5 mini AI
Use the amortization payment formula: payment = r·PV / (1 − (1 + r)^(−n)). Monthly rate r = 0.175/12 = 0.0145833333, n = 12.
The increase = 1000 · [r / (1 − (1 + r)^(−12))] ≈ 1000 · 0.09144 ≈ $91.44.

Answer: b. $91.44