Question

Sarah has a credit card balance of $9,450 with an APR of 17%. With her current budgeted payment, Sarah will be able to pay off this debt in 36 months. But Sarah’s best friend just invited her to spend two months in Europe with her in 9 months. Wanting to have her credit card balance paid off before she goes to Europe, Sarah decides to take on a second job. What additional monthly income will Sarah need in order to pay off her credit card in 9 months?
a.
$336.92
b.
$467.23
c.
$788.85
d.
$1125.77


Please select the best answer from the choices provided

A
B
C
D

Answer 1

C

Compute the monthly payment formula: P = r·PV / (1 − (1+r)^−n), with r = 0.17/12.

Current (n = 36): P36 ≈ $336.92
Desired (n = 9): P9 ≈ $1,125.77

Additional needed = P9 − P36 ≈ $1,125.77 − $336.92 = $788.85 → choice C.