2017-08-23 23:13:45
June has a credit card balance of $4,350 that comes with a 19% APR. She would like to have the balance paid off in the next 8 months, but she is having trouble making the monthly payments required to do so. In order to lower her monthly payments, she decides to sell her porcelain doll collection for $2,000 to apply directly to her credit card balance. June still wants to pay off the balance in 8 months. By applying the doll money, how much has June lowered her minimum monthly payment?
2017-08-24 05:51:23

Orginal credit card amortization(A1) = Principal[(i(1+i)^n)/(1+i)^n-1] where  Principal= $4350 i= 19%/12= 1.583% n= 8 A1= $583.19 Following the same formula with reduced principal amount, P2= 2350 A2=315.06 Subract A2 form A1 to get the difference Difference= $268.13 June was able to decrease her amortization by $268.13 after paying off $2000 from the Principal amount.