Question

You charge $1000 to a credit card. Use the compoundinterest formula to find the new amount you'll owe onyour credit card after 1 month (i.e. 30 days) with 24%APR compounded daily.rntThe 'compound interest formula A=PX+Where A = final amountP = initial balance (principal)r = interest rate as a decimal (e.g. 5% would be 0.05)n = number of times interest applied per year (e.g. 12for monthly, 52 for weekly, 365 for daily)t = time in years (e.g. 6 months would be 0.5)Interest CalculatedDid I get it right?

Answer 1

Using the formula;

`A=p(1+(r)/(n))^(nt)`

From the question,

P= $1000 r =24%=0.24 n=365

t = 1/12

Substitute the values into the formula

`A=1000(1+(0.24)/(365))^{365*(1)/(12)}`

So we will go ahead and evaluate

`A=1000(1+0.00065753425)^(30.4166667)`
`A=1000(1.00065753425)^(30.4166667)`
`A\approx1020.19`

The final ammount is approximately $1020.19