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Using the monthly payment formula, it is found that the best plan is given by:
The monthly credit card payment would be $238.37, which is lower than the monthly payment on the bank loan.
What is the monthly payment formula?
It is given by:
[tex]A = P\frac{\frac{r}{12}\left(1 + \frac{r}{12}\right)^n}{\left(1 + \frac{r}{12}\right)^n - 1}[/tex]
In which:
- P is the initial amount.
- r is the interest rate.
- n is the number of payments.
For the simple interest payment method, the parameters are given as follows:
r = 0.06, n = 3 x 12 = 36, P = 11000, r/12 = 0.06/12 = 0.005.
Hence:
[tex]A = P\frac{\frac{r}{12}\left(1 + \frac{r}{12}\right)^n}{\left(1 + \frac{r}{12}\right)^n - 1}[/tex]
[tex]A = 11000(0.005)\frac{(1.005)^{36}}{(1.005)^{36} - 1}[/tex]
A = 334.64.
For the credit card payment method, the parameters are given as follows:
r = 0.16, n = 6 x 12 = 72, P = 11000, r/12 = 0.16/12 = 0.0133.
Hence:
[tex]A = P\frac{\frac{r}{12}\left(1 + \frac{r}{12}\right)^n}{\left(1 + \frac{r}{12}\right)^n - 1}[/tex]
[tex]A = 11000(0.0133)\frac{(1.0133)^{72}}{(1.0133)^{72} - 1}[/tex]
A = 238.37.
The monthly credit card payment would be $238.37, which is lower than the monthly payment on the bank loan.
More can be learned about the monthly payment formula at https://brainly.com/question/26267630
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