Question

Jason makes a credit card purchase for $3000 that compounds interest daily. The APR is 4%. How much interest is earned on Jason's card after 1 year if Jason makes no payments?

The amount of interest earned on Jason's card after 1 year is $

Answer 1

Explanation:

step 1. A = P(1 + r/n)^nt. this is the compounding equation where n is the number of compounds in a time t and P is the original amount. r is the rate.

step 2. A = 3000(1 + .04/365)^(365(1))

step 3. A = 3122.43. this is the total amount owed on the credit card which includes principle and interest. the interest is less 5he principle

step 4. 3122.43 - 3000 = 122.43