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You pay for a $500 purchase using a credit card. The credit card company charges a 24% interest rate, compounded monthly, on the unpaid balance. How much will you owe after 3 months? (Assume you don't make any payments during this time.)

Mathisfornerds  Mar 10, 2018
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You pay for a $500 purchase using a credit card. The credit card company charges a 24% interest rate, compounded monthly, on the unpaid balance. How much will you owe after 3 months? (Assume you don't make any payments during this time.)

 

FV = PV x [1 + R]^N

FV = 500 x [1 + 0.24/12]^3

FV = 500 x [1.02]^3

FV = 500 x  1.061208

FV = $530.60 - amount that you will owe on the credit card after 3 months, principal + interest.

Guest Mar 11, 2018

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