Allison accumulated $7,000 in credit card debt. If the interest rate is 18% per year and she does not make any payments for 6 years, how much will she owe on this debt in 5 years for quarterly compounding? Round your answer to two decimal places.

Guest Jan 30, 2021

#1**0 **

Best Answer

6 years .....or 5 years?

5 years quarterly compounding means there are 5 x 4 = 20 periods

the periodic interest rate is .18 / 4 = .045

the amount in 5 years will be then:

7000 (1+.045)^{20} = $ ............

if is six years change the '20' exponent to '24' and re-calculate.....

Guest Jan 30, 2021