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Time-To-Pay-Off Formula

Time-To-Pay-Off Formula. How long will it take to pay off your credit card debt?. (about 9 slides). How many payments to go?. You owe $1200 on your credit card. Your card’s APR is 12%. You can afford to pay $40 each month. You will make no more purchases. How many more payments to go?.

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Time-To-Pay-Off Formula

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  1. Time-To-Pay-Off Formula How long will it take to pay off your credit card debt? (about 9 slides)

  2. How many payments to go? You owe $1200 on your credit card. Your card’s APR is 12%. You can afford to pay $40 each month. You will make no more purchases. How many more payments to go?

  3. Time-To-Pay-Off Formula On calculator: Where M = monthly payment P = amount of loan r = monthly interest rate n = number of payment periods

  4. Time-To-Pay-Off Formula On calculator: • You owe $1200 on your credit card. P=1200 • Your card’s APR is 12%. r = 12%/12 • You can afford to pay $40 each month. M=40 • How many more payments to go?

  5. Time-To-Pay-Off Formula On calculator: • You owe $1200 on your credit card. P=1200 • Your card’s APR is 12%. r = 12%/12 • You can afford to pay $40 each month. M=40 • How many more payments to go?

  6. On PC calculator: (40/(40-(1200*0.01)))log/(1+0.01)log= 35.85 or… 36 monthly payments

  7. Time-To-Pay-Off Formula In Spreadsheet: =NPER(MonthlyRate,MonthlyPayment,-AmountOwed) =NPER(12%/12,40,-1200) =35.85 or 36 monthly payments

  8. Now You Try It!How many payments to go? You owe $8000 on your credit card. Your card’s APR is 18%. You can afford to pay $200 each month. You will make no more purchases. How many more payments to go?

  9. (200/(200-(8000*0.015)))log/(1+0.015)log= 61.54 or… 62 months =NPER(18%/12,200,-8000)

  10. ---end of presentation---

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