Lamar has budgeted to pay $150 each month on his credit card which has a $4,938 balance and has an annual finance rate of 19.9%. If he wants to pay the credit card off in 1 year, how much would he have to increase his monthly payment by?

$303

Explanation:

To find the answer, we first convert the 19.9% annual rate to a monthly rate. The conversion results in a 1.5% monthly rate.

Next, we use the present value of an annuity formula to find the

$4,938 = X [1 - (1 + 0,015)^-12] / (0,015)

$4,938 = X (10,9)

$4,938 / 10,9 = X

$453 = X

So, to pay off the credit card balance in one year, the monthly annuity is $453.

$453 - $150 = $303

So, the additional amount that Lamar would have to pay is $303

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