Quentin has been using his credit card too much. His plan is to use only cash until the balance of $8400 is paid off. The credit card company charges 18% interest, compounded monthly. What is the effective interest rate? How much interest will he owe in the first month's payment? If he makes monthly payments of $220, how long until it is paid off? Solution: 1. Monthly interest rate is im 2. Effective annual rate is la- 3. First month's interest = $ 4. Hence P/A factor is look for na (Done by interpolation)