Question

Katsumi applied for a credit card with a limit of $1,000. When the application was approved, Katsumi bought a new CD player and speakers for $975. The credit card company offered to ignore the finance charges if Katsumi makes the minimum monthly payment of $15. How many months will Katsumi need to pay off the music system at this rate?

Answer 1

Answer:

65 months

Explanation:

Data provided in the question:

Limit of the credit card = $1,000

Cost of the new CD player and speakers = $975

Minimum monthly payment made by Katsumi = $15

Now,

since there are no finance charges charged,

therefore,

the net payment that has to be made is $975

Therefore,

Months needed to pay off the rate

= [ Net payment amount ] ÷ [ Minimum monthly payment ]

= $975 ÷ $15 per month

= 65 months