Question

Jillian has $2000 in credit card debt. Every month, she pays $200 to the credit card company at the beginning of the month, the credit card company applies a 2% monthly interest rate to the balance at the end of the month, and her balance is always rounded to the nearest cent. After the end of five months, what is her ending balance after interest?

Answer 1

Jillian's ending balance after five months with a 2% monthly interest rate is approximately $2208.16.

Step-by-step explanation:

To calculate Jillian's ending balance after five months with a monthly interest rate of 2%, we can use the compound interest formula: A = P(1 + r)^n, where A is the ending balance, P is the principal (initial balance), r is the interest rate per period (in decimal form), and n is the number of periods. In this case, P = $2000, r = 0.02, and n = 5. Plugging these values into the formula, we get: A = $2000(1 + 0.02)^5.

Calculating the expression inside the parentheses first, we have (1 + 0.02) = 1.02. Then, raising 1.02 to the power of 5, we find that (1.02)^5 ≈ 1.104081. Finally, multiplying $2000 by 1.104081, we find that Jillian's ending balance after five months with interest is approximately $2208.16.