Answer:
Option B- 91.44 is the correct Answer.
Step-by-step explanation:
Cesar only has 12 months left before he pays off his credit card completely.
His current balance = $3,750
APR = 17.5%
Now we use the formula :
PV of annuity =
PV = Present Value
P = Periodic payment
r = rate per period
n = number of period
case 1 :
PV of annuity = $3,750
P = ?
r = 17.5% annually = % monthly monthly
n = 12 months
Now we put the values in formula
⇒ P=
⇒ P =
⇒ P =
⇒ P = 342.91
Case 2 :
PV of annuity = 3750 + 1000 = 4750
P = ?
r = 17.5% annually = % monthly = monthly
n = 12 months
Putting the values in formula
⇒ P=
⇒ P =
⇒ P =
⇒ P = 434.35
Cesar's increased monthly payment will be
434.35 - 342.91 = 91.44