+0  
 
0
120
1
avatar

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.

 Jan 30, 2021

Best Answer 

 #1
avatar
0

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.....

 Jan 30, 2021
 #1
avatar
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

18 Online Users

avatar