Suppose you owe $1,100 on your credit card. The annual percentage rate (APR) is 18%, compounded monthly. The credit card company says your minimum monthly payment is $19.80.
a. If you make only this minimum payment, how long will it take for you to repay the $1,100 balance (assuming no more charges are made)?
b. If you make the minimum payment plus $10 extra each month (for a total of $29.80), how long will it take to repay the $1,100 balance?
c. Compare the total interest paid in Part (a) with the total interest paid in Part (b).