Real-Life Math -- Solution
Here's the solution:
FIRST YEAR
$15 per
month x 12 months = $180
$700 debt - $180 paid after first year = $520
left
Interest: $520 x 0.1275 = $66.30
$520 + $66.30 in
interest = $586.30 remaining on the debt
SECOND YEAR
$586.30
remaining - $180 paid in second year = $406.30
Interest: $406.30
x 0.1275 = $51.80
$406.30 + $51.80 = $458.10 left to pay
THIRD YEAR
$458.10 remaining - $180 paid in third year = $278.10
Interest:
$278.10 x 0.1275 = $35.46
$278.10 + $35.46 = $313.56 remaining on the
debt
FOURTH YEAR
$313.56 remaining - $180 paid in
fourth year = $133.56
Interest: $133.56 x 0.1275 = $17.03
$133.56
+ $17.03 = $150.59
FIFTH YEAR
This will not be a full
year of payments.
$150.59 remaining / $15 per month = 10 months
(plus $0.59)
Total time = (4 years x 12 months per year) +
10 months
Total time = 48 months + 10 months
Total time = 58 months
It
will take her 58 months to pay off her debt.
Total paid = ($66.30
+ $51.80 + $35.46 + $17.03 interest payments) + $700 original debt
Total
paid = $170.59 interest + $700 original debt
Total paid = $870.59
In
the end, she will have paid $870.59.