Chuck has a credit card balance of $4,750 with an apr of 17%. with his existing debt payment plan, chuck will not be able to pay off the debt for another 20 months. to speed up the process, chuck decides to take $2,000 from his savings and apply it to the balance. he plans to pay the remaining balance in 12 months. how much will chuck save in finance charges (interest) by doing this? a. $259.72 b. $478.28 c. $683.85 d. $738.00

Hi there
First find the monthly payment using the formula of the present value of annuity ordinary
The formula for PMT is
PMT=pv÷[(1-(1+r/k)^(-n))÷(r/k)]
PMT monthly payment?
Pv present value 4750
R interest rate 0.17
K compounded monthly 12

N=kt where k=12 and t=20/12
N=20

PMT=4,750÷((1−(1+0.17÷12)^(
−20))÷(0.17÷12))=274.4

Total paid
274.40×20=5,488
Interest charged
5,488−4,750=738

Now let's find the interest of the second decision
She paid 2000 So the present value or the loan is 4,750−2,000=2,750
Now use the formula
PMT=2,750÷((1−(1+0.17÷12)^(
−12))÷(0.17÷12))=250.81

Total paid
250.81×12=3,009.72
Interest charged
3,009.72−2,750=259.72

Chuck save in finance charges (interest) by doing this
738−259.72
=478.28answer

Good luck!

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